The hydration shell model for excess thermodynamic quantities is examined. A simple formula for the excess energy of a solute in solution is presented which is expressed as an integral of the solvent binding energy over the hydration shell. For methane in water, which is chosen as the first application, the binding energy of a water molecule around the solute is calculated from a Monte Carlo simulation as a continuous function of the distance from the solute. The localization of the excess energy within the hydration shell is then analyzed in terms of the deviation of the binding energy from the bulk value. About 70% of the total excess energy of methane in water is accounted for by the hydration shell formula using the first minimum in the methane-water radial distribution function to define the shell. The dependence of the excess energy on the solution process is investigated. The difference between the excess energy in the constant-volume process and that in the constant-pressure process is estimated for a variety of water models and compared with experiments. The hydration shell formula is shown to correspond to the excess energy at constant pressure. The contribution of the solvent reorganization energy to the total excess energy and to the free energy of solvation is discussed.