Unit kWh Prices for Business Electricity
- Ever wondered what the prices per kilowatt hour (kWh) might be for your business?Check out our guide to current unit rates and how to lower your costs.
- The prices for business users per unit are similar to those in the domestic market. Businesses pay VAT at the current rate of 20%, whereas residential customers pay a reduced rate of 5%.
The Wholesale Market Effect
- The wholesale price of electricity varies each week, or even daily. Over the past few years these have stabilised to between 5p and 6p per kWh. These are the absolute lowest prices available if your company could purchase electricity directly from the generating companies.
For most of us, we have to purchase via a retail organisation such as one of the electricity suppliers. General retailing principles dictate that retail prices are double the wholesale price. And this is the point in case with energy.
- Rates we have seen over the past 12 months for SMEs vary from 13.2p to 16.7p plus VAT for unit prices per kWh. There is also a standing charge to be added. You may be offered a low unit rate, but if the daily charge is higher, then your annual bill will average out the same.
What Affects My Prices?
- The type of business you own dictates the consumption usage patterns during the week. Not all businesses work Monday to Friday 9.00am to 6.00pm. Those that consume high energy during the evenings and weekends will have different rates than during the day. These are usually lower as the demand is lower from the network.
- How much overall energy you use in one year generally dictates the pricing. Normally higher volume equates to a lower price. However, if unit rates decrease sometimes the daily standing charge increases. It’s always best to check your overall offer in terms of the cost incurred for a full year rather than unit prices.
- Whether you run a small business or large corporation depends on your buying power. There are some “group buying” organisations that work on behalf of SME companies, but they’re rare. A micro business just has to take the standard tariffs that are on offer.
- If you have both electricity and gas under a dual fuel contract you may find that both fuels have slightly lower rates. This isn’t the case for every power company so check single and dual fuel contracts together.
- Your current energy provider could be the most or least expensive in the marketplace. You won’t know until you undertake a business electricity comparison to check if you really are on the best deal available.
- The region your business is located within the UK affects quotes because prices vary around the country. Scotland has some of the highest prices in the UK, whereas the Midlands some of the lowest.
- The length of your contract has an impact on both unit rates and daily charges. On average each year you extend your contract adds an additional 6% to the unit cost whilst 2%-6% is deducted from the standing charge.
Generate Your Business Energy
With the long-term trend on wholesale prices, government green levies and investment only continuing to increase, perhaps now is the time to consider generating your own electricity supply?
Most of today’s options gear themselves towards renewable systems that don’t use fossil fuels and don’t produce any harmful carbon dioxide into the atmosphere. In addition to the environmental benefits, you can sell any electricity you don’t use to the National Grid using feed-in tariffs.
You may also be eligible for some form of a grant or low-cost loans for your green investment. You can choose from solar power, wind turbines, Ground Source Heat Pumps (GSHPs), or biomass.
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