It's pretty obvious that the Beast from the East would have an impact on heating demand, but do you know what the impact of this is on your business?
Do you know what degree days, weather normalisation and regression in the energy industry actually mean? If you do, then you’re probably in the minority.
For those who don’t know, essentially, it’s the importance of accounting for changes in the weather and calculating how much it can influence the cost of our energy bills at the end of each month. Even if your energy bill is higher than last year, it doesn’t mean that you’re being less efficient. In fact, it’s completely possible that the opposite is true.
Let’s take a quick look at these different terms:
What is a Degree Day?
Technically speaking, a degree day is a difference between the average temperature and the base temperature at which heating is no longer required, multiplied by the number of days in between these figures.
Think about a degree day, not in terms of temperature, but rather as an indication of the amount of heating required in a given period, usually per week or month.
The classic mistake people make is thinking that twice as many degree days means twice as much heating and therefore twice as much gas consumption, but you can’t simply divide one by the other. Every building reacts differently to changes in outside air temperature, so understanding of the relationship between the two variables is essential.
The importance of accounting for heating
It’s estimated that 46% of energy costs in public and commercial buildings in the UK can be attributed to space heating. That means that nearly half of our monthly energy bill will be the cost of heating your building.
This can make validating energy savings particularly problematic for energy managers. For example, if we suggested investing in a more energy efficient boiler, our customer might expect to see a lower gas bill. However, if it had been colder than previously that month the more efficient boiler would have to work harder to maintain a comfortable temperature. For example, a particularly cold October could prompt a 20% increase in the amount you pay, which could make it look like something had gone terribly wrong but in fact, it’s a direct response to the weather.
This is where degree days are so important. By normalising use against heating demand we’re able to estimate the actual benefit offers and use this to measure the success of an energy saving project.
The effect of the Beast from the East
The extreme cold weather throughout March 2018 not only brought the UK to a standstill but it also put energy bills through the roof. Sub-zero temperatures meant that heating systems needed to run flat out just to keep buildings warm, using a large amount of energy when the cost per unit was very high.
By the time the bills had come through the door, all of the snow had melted and people wanted to know why they had been charged a small fortune for energy.
Fortunately, at amber we run budget data through our regression model to give our customers advanced warning if there is any cause for concern with their energy use. Because we were aware of the Beast from the East, we knew that there would be an increase in energy cost and therefore gave forewarning that their bill would have a marked due to the change in the market brought on by the weather.
In some cases, we saw gas consumption 43% higher than budgeted for, with our analysis attributing this entirely to changes in weather. Looking at the chart above, you can see that the number of degree days hasn't been this high since 2010, meaning that energy use is likely to be higher in comparison to previous years for most businesses.
When a genuine issue arises, we are able to use this same regression model to account for the influence of weather and isolate the excess consumption that requires further investigation. This makes it easier and quicker to identify errors and, in turn, put the measures in place to rectify them.
Use our Efficiency and Energy Engineering Team
It pays to invest in expertise, giving you access to in-depth energy audits, analysis and efficiency measures to help your business meet its energy objectives. At amber energy®, we have a huge amount of experience across a wide range of industries providing both solutions and data led energy savings.
Interested to see what we can do for you? Get in touch with our expert energy engineers by emailing us at email@example.com.