Value of incidental heat in buildings

Electricity use is rising as computing and other indoor services expand, and much of this energy ultimately remains inside buildings as heat. We develop an economic framework for evaluating electricity use when its incidental heat can be repurposed for thermal comfort. The framework defines the dynamic effective cost of electricity (DECE) as the retail price net of the discounted value of incidental heat that can be used over time. The model yields closed-form expressions for the shadow value of stored heat and characterizes conditions under which insulation and incidental heat act as dynamic complements or substitutes. In well-insulated buildings in cold climates, the ECE of certain appliances can approach zero; in milder or cooling-dominated regimes, continuous high loads can raise ECE above the tariff. The framework provides a tractable basis for valuing insulation, electricity efficiency, and time-of-use tariffs.