Energy 101: How Power is Created, How We Use it, And What it Costs
By: Greg Haynes © 2017 Southeast Energy Storage
Did you know that the average Florida home uses 1,100 kWh per month? This figure translates to an average of 1.25kW per hour of energy usage. For residential households, the majority of this usage is concentrated into one to two periods per day depending on the season. In the winter, there are typically two periods per day when energy consumption is the highest, the morning between 7:00am-10:00am and the evening between 5:00-9:00pm. In the summer, the demand for energy grows all day and reaches its peak typically once in the evening between 6:00pm-10:00pm. This is primarily caused by air conditioners working to cool homes from the heat of the summer sun. In the energy industry, these are known as peak demand periods.
Peak demand periods drive the behavior of utilities because it is when the cost to deliver energy to our homes is the highest. The reason energy costs more to produce or acquire at different times of the day has to do with the age-old supply and demand curve as well as the economy of scale. As we know, energy has to be produced and delivered to our homes from power plants or renewable sources. Each source has a different cost associated with producing and delivering energy. Typically, coal fired power plants are large and expensive to manage but since these produce a high volume of energy and the cost of coal is relatively cheap, the cost per unit of energy produced is relatively low. A natural gas fired power plant has a much smaller footprint, has fewer moving parts, and burns cleaner so therefore needs less equipment to meet regulatory standards. In addition, the cost of the fuel it burns has fallen drastically. These factors have made natural gas power plants the resource of choice in recent years for most new power plants built. These plants serve a wide range of uses in supplying our energy needs. Some plants are large and produce a high volume of energy similar to the profile of a coal plant, and while these require less money to operate, the price of natural gas fluctuates broadly so their economy compared to coal can change daily.
