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Electricity Prices Cost Per KWh

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Considering electricity unit rate prices can help you determine which tariffs are best for your business. Selecting a tariff with low unit rates can help to reduce your business’ electricity bills. This saves funds to invest in other areas of the business.

In this guide, we’ll take you through the average business electricity rates in the UK. We'll also advise on how you can lower your business’ electricity costs. 

Electricity Prices For Different Business Sizes 

The average cost of business electricity in 2020 is 13.93 pence per kWh. The amount your business pays will depend on several factors. These include the size of your business and your energy consumption levels.

Here are the average costs of electricity unit rates for different business sizes in 2020.

Business Size

Yearly usage (kWh)

Unit price

Standing charge

Cost per year

Micro business

8,000

16.74p

27.40

£1,439

Small business

20,000

14.83p

26.83

£3,064

Medium business

40,000

13.68p

26.41p

£5,568

Large business

80,000

12.93p

26.20p

£10,439

The electricity rate per kWh varies between businesses. Different suppliers may also set different rates. Larger businesses purchasing more energy will have more buying power. This allows them to negotiate lower unit prices.

The unit rate prices for business gas are much lower than those for electricity. SMEs can pay between 2.9p/kWh to 3.4p/kWh but may face a higher standing charge up to 70p per day.

Lower prices tend to be more available to companies that consume 100,000 kWh or more per year. We recommend using your business’ most recent yearly consumption data when comparing prices.

What Are The Typical KWh Prices For Different Industries?

The type of industry your business operates in will impact consumption. This translates to higher rates per kWh.

Here are some examples of prices for different types of businesses:

Business Type

Unit price (KWH)

Standing charge

Yearly Cost

Coffee shop

13.42p

26.70p

£2,109

Dental Surgery

13.84p

27.61p

£2,176

Hair salon

13.88p

27.23p

£2,182

Small farm

14.19p

24.21p

£2,218

Newsagent

14.51p

24.28p

£1,830

Restaurant

14.87p

25.46p

£3,067

 

What Does kWh Mean?

 Kilowatt hour (kWh) is a unit used to measure the amount of electricity consumed. Energy companies use this unit to calculate your energy bills.

1 kWh is equivalent to using a computer for 3 hours or boiling the kettle 10 times.

What Other Costs May Be Included In My Business Electricity Bill?

There are a few other factors that make up your business electricity bill. These include:

  • Standing charge. This is a daily fee for the supply of energy to your business. Tariffs with no standing charge are available, however, these often have higher unit rate costs.
  • VAT. Businesses are required to pay 20% VAT on their energy bills.
  • Climate Change Levy (CCL). This is a tax for electricity generators not using renewable energy sources. Businesses with low energy consumption can be exempt from having to pay CCL. 

Understanding Your Electricity Bill

Here is what an energy efficient business looks like: 

 

Annual consumption (kWh)

 

Unit price per kWh

 

Daily standing charge

 

Total yearly bill (excluding CCL & VAT)

15,000

14p

25p

£2,191.25

 

The business above would be charged £91.25 for the standing charge. (365 days * 0.25).  Their electricity usage is £2,100 (15,000 * 0.14). This gives a total bill of £2,191.25, excluding additional charges with VAT and Climate Change Levy (CCL).

What Are The Prices Per KWh For Wholesale Electricity?

Wholesale electricity prices can vary weekly or even daily. These prices have dropped over the years; in 2018 prices were around 6p per kWh, in 2020 they are at roughly 3p per kWh. These are the lowest prices available. 

In most cases, you’ll purchase your gas and electricity from suppliers such as Eon, Ovo or Shell. These retail prices tend to be double the cost of the electricity wholesale prices.

A good price for electricity rates per kWh is around 12p. For most SMEs, electricity rates vary between 13.2p and 16.7p. Value-added tax (VAT) is added per kWh. This is charged at a rate of 20% for businesses and 5% for domestic customers. Standing charge will be applied unless you have a no standing charge tariff.

You should shop around and compare business electricity deals. Using a price comparison engine will help you find the cheapest tariffs. Bear in mind that tariffs with lower unit rates usually have a higher priced standing charge.

What Affects The Market Price Of Electricity?

 Your business electricity rates will be impacted by market activity. These factors are:

  • Demand. A rise in demand can lead to an increase in wholesale electricity costs. As this will cause generators to fund the additional output.

  • Weather. The weather can cause an increase or decrease in the demand for electricity. People will use lighting and heating more in cold and dark weather. On the flip side, high winds can help with wind turbine energy generation.
  • Commodities. The cost of the commodities that create electricity has a significant impact on market costs. The main commodities being fossil fuels such as gas, coal and oil.
  • Carbon Cost. Generators powered by fossil fuels are required to purchase a certificate for each tonne of CO2 created. This serves as a penalty for not using renewable sources such as solar, wind or combined heat and power. This expense can have an impact on electricity prices.
  • Delivery Constraints. Any outages, maintenance or connection issues can affect electricity market costs.

What Factors Impact My Business Electricity Costs?

 Certain factors that are specific to your business will impact electricity prices. These include:

  • Consumption. The more electricity your business consumes, the higher your bill will be.
  • Business region. Different regions within the UK have different prices. This is known as the ‘energy postcode lottery.’
  • The size of your business. Larger businesses have more buying power. They may be offered cheaper rates through group buying schemes.
  • Your energy provider. Different energy suppliers offer different rates. Some will be cheaper than others. Switching suppliers can help you find a cheaper deal.
  • Your energy tariff. Your chosen energy tariff should be suitable for your business’ needs. An unsuitable tariff can lead to high bills.
  • The length of your contract. Business electricity rates can vary depending on the length of your contract. You may be offered cheaper rates if you sign up to a longer deal.
  • Whether you have a dual fuel contract or not. You may be offered a duel fuel discount of you select the same provider for gas and electricity.
  • Your business’ operation times. If your business operates during off-peak business hours, you may be able to get cheaper electricity rates. These are known as Economy 7 (or Economy 10) tariffs.

How To Get Cheaper Business Electricity Rates

The best way to get cheaper rates for your business electricity is to compare prices. This allows you to explore different options available.

We provide you with an expert comparison of some of the best business electricity deals on the market. The Business Energy comparison engine will provide you with quotes in a matter of minutes. All you need is your business address to get started.

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Percentage energy savings quoted are against customers who let their last contract renew automatically.

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