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A guide to business energy price & costs per KWH
Business owners are often looking for new ways to reduce their business’s costs. If we take a look at one cost that most commercial customers have in common – business gas and electricity – you will notice that your bill is mostly made up of two charges – a cost per unit (kWh) and a standing charge.
There are a number of different ways that you can reduce your business utilities costs. One common method is to run a business energy comparison. In doing so, many business owners are likely to prioritise a deal with the cheapest unit rate and standing charge. However, this may not always be the best strategy to follow when comparing business energy costs.
To understand why this is the case, we should first take a look at what the main business energy costs cover:
- Standing charge
A standing charge is a daily charge that covers the costs incurred by the supplier to maintain the national grid, and supply power directly to a premises.
- Unit (kWh) charge
A charge to cover each unit (kWh) of gas or electricity that a business uses. This is a set rate, but the total cost will vary depending on the amount of energy that a business consumes.
As you can see, the unit cost and standing charge account for your business energy tariff’s fundamental costs. But, what you may not realise is that business energy suppliers have so much more to offer. Whether you’re looking for the ease of online account management, or a personal account manager to offer bespoke energy advice for your business, suppliers can offer a variety of different benefits. It’s recommended that you take these supplier benefits into consideration when running a business energy comparison.
For more information on the benefits that a supplier can offer, visit of business energy supplier page, and click a link to the relevant suppliers for more information.
Comparing business energy costs per kWh
When approaching a supplier for a business energy quote, you will usually receive two prices – one for standing charge and one for a unit rate. However, because each business receives a bespoke quote when comparing business energy costs, it can be difficult to understand exactly what level of cost is right for your business.
Unfortunately, as no two businesses are the same, there is no one-size fits all solution when it comes to business gas and electricity. It is possible, however, for business owners to develop some understanding of how much their business energy should cost by comparing it to the market averages.
If you would like to know more about comparing business energy prices and costs, click the link.
Average cost of electricity and gas per kWh
In the table below we take a look at the industry average electricity and gas cost per kWh, as well as standing charges, based on business size.
If you find that you’re paying above the average price for electricity or gas per kwh, then there’s a good chance that you could save money when running a simple business energy comparison. However, as recommended above, when running a comparison, it’s important that you do not base your entire switching decision on a cheap cost per unit (kWh), or a cheaper standing charge, as there are many other factors – such as the quality of customer service – that should be taken into account.
What can affect your business energy cost per kWh?
The cost that you pay per unit (kWh) can vary between business energy suppliers. When designing your business energy quote, a supplier will first assess the circumstances of your business. This assessment of your business will determine the cost of your quote, including the cost per unit (kWh) that you’ll have to pay for the energy that your business is using.
To help you gain a deeper understanding of how a supplier designs a business energy quote, it can help to know exactly what they look at when assessing your business.
In brief, when assessing and designing your business energy costs, a supplier will look at:
- The industry that your business operates in.
- The average annual energy consumption of your business.
- The size of your business.
- The number of fuels you are being quoted for.
- Your current business energy supplier.
- The location of your business.
- The length of contract that your business requires.
Outside of the factors given above, the cost per unit (kWh) can also be impacted by factors outside of your control and the control of your supplier.
When your supplier purchases energy from the wholesale market, a variety of political, geographical and economic factors can have an effect on the wholesale price of energy. If your supplier experiences an increase in the wholesale cost of energy, then they are likely to pass this cost onto their customers by increasing the unit (kWh) cost. Alternatively if these external factors reduce the wholesale cost of energy, then you may be in a position to negotiate a better business energy costs as a result.