Second instalment in the series measure → cost → manage. Yesterday we looked at submetering: metering by machine and process. Today, the step that turns that metering into the language of management: the real cost. Because most companies that allocate energy costs do so with a formula that looks reasonable but is systematically wrong: kWh consumed × average price on the bill. In a market that since yesterday has been trading in 96 daily rounds, and where on the same day the price has been €12/MWh at 14:00 and €265 at 21:00, that formula doesn’t allocate costs: it invents them.
Why the average price lies
The average price on your bill is the result of when the plant as a whole consumed. Applying it equally to every process assumes they all consume with the same hourly profile — and that is almost never true.
An example with round numbers. A plant with two processes consuming 100,000 kWh a month each: process A runs from 8:00 to 18:00 (solar hours, low prices); process B is a night shift with an evening peak (expensive hours). With an average bill price of €110/MWh, traditional accounting allocates €11,000 to each. Using the actual prices for each time slot, process A may have cost €7,500 and process B €14,500 — one nearly double the other, with identical consumption.
The consequences are not cosmetic: the product cost sheet for what B makes is understated (and A’s is penalised); efficiency investment is poorly prioritised, because a kWh saved isn’t worth the same in A as in B; and load shifting — the star lever of the quarter-hourly market — doesn’t even appear in the analysis, because the average price wipes it out by construction.
The right formula, layer by layer
The real cost of a process is built from three ingredients, from coarsest to finest:
1 · Its load profile — from submetering if you have it; if not yet, an estimate based on operating hours is the honest first step (and the reason to install metering wherever the load is significant).
2 · The price of each time slot. For indexed contracts, the quarter-hourly price from OMIE (the Iberian electricity market operator) plus the regulated components; for fixed contracts priced by period, the price of each tariff period P1–P6. In both cases, the energy charge stops being an average and becomes a sum: consumption in each quarter-hour × its price.
3 · The allocation of power and fixed costs. The capacity (power) charge is allocated not by kWh but by contribution to peak demand: the process that is running when the plant hits its maximum is the one that sizes the contracted power — and its excess power charges. Submetering tells you who was consuming in the quarter-hour of the monthly peak; without it, this allocation is impossible and the cost tends to be loaded unfairly onto the largest energy consumer, which is not always the one that sets the peak.
With all three layers, each process gets its cost in euros per month and per unit produced — and that second figure is the bridge to the third instalment of this series: efficiency indicators, on Friday.
What changes when the cost is real
Product cost sheets get corrected — sometimes by several percentage points for electricity-intensive products, enough to review pricing or the production mix.
Investments get re-prioritised: a battery, load shifting or heat recovery (in Spanish) are assessed against the cost of the hours they actually avoid, not against an average that dilutes them.
Internal conversations change tone: telling production ‘the plant uses a lot of energy’ changes nothing; showing them that their night shift costs twice as much per kWh as the morning shift opens a concrete negotiation about schedules and setpoints.
The PowerCloud view
Done by hand, this calculation is a heroic spreadsheet that gets abandoned by the second month. PowerCloud does it continuously: it cross-references the main meter and the submetering data with the actual quarter-hourly price in your contract, allocates the capacity charge by contribution to peak demand, and publishes the cost per process, per area and per unit produced — every day, without anyone having to rebuild it. Energy accounting stops being an annual estimate and becomes just another view of operations.
Do you know what your most important process really costs — in euros, not in kWh? We’ll calculate it for you using your actual load profile and your contract prices, and show you the difference compared with the average-price allocation you are probably using today. If you don’t have submetering yet, we start with the main meter’s load profile — we obtain it from Datadis (the official platform of Spain’s electricity distribution companies) with your authorisation. Diagnostic session: 30 minutes, no obligation.
Sources: OMIE (quarter-hourly prices); previous posts in this series and on the blog at powercloud.es/noticias/; Schneider Electric and Linkener (energy accounting practice with submetering).
