In the world of business energy, understanding key concepts such as kWh, kW and kVa is very important. These terms are commonly used when dealing with your energy supplier, electricity consumption, power demand and business energy billing in the UK.
As a business owner, understanding the differences between these units (and prices per kWh) can help you make better business decisions regarding your energy consumption and overall energy costs.
A kW, or kilowatt, is a unit of electrical power, representing the rate at which energy is used, transferred, or produced. It measures the actual – or ‘real’ – power consumption of electrical devices, appliances, and equipment.
Kilowatts are commonly used to describe the power output of electrical appliances, devices, and machinery. They are very important in determining the energy consumption of devices. kWs help in accessing the electrical load on power grids and make up the unit prices per kWh on your energy bill (more on that below).
In simpler terms, a kilowatt is equal to 1,000 watts. It shows the amount of energy required to operate a specific device within a given timeframe. For businesses, understanding power demand in kilowatts is crucial for managing energy usage effectively, optimising operations, and planning adequate energy/power supply.
A kWh, or kilowatt-hour, is a unit of energy used to measure electricity consumption. It illustrates the electricity usage within a one-hour timeframe. In the UK, businesses and homes are typically billed based on the total number of kilowatt-hours consumed during a specific timeframe.
The kWh measurement serves as the foundation of your electricity bills. Energy suppliers monitor the amount of electricity consumed by a business during a specific time period – typically one month – and apply the unit cost per kWh (usually shown in pence) to calculate your total electricity bill.
The unit price per kWh allows you to track your business’ electricity usage patterns accurately. This allows you to implement any energy-saving measures into your business routine to reduce overall costs. It’s important to compare business electricity prices, as sometimes the cheapest business electricity suppliers may not be the best solution for your business requirements.
kWh usage also plays a critical role in sustainability efforts, whether you have a small business or a large enterprise. Knowing your business energy per kWh helps you to access your carbon footprint and work towards acquiring energy efficiency practices.
A quick summary of kWh:
Knowing these prices can help you implement energy-saving strategies into your business routine; saving money and reducing your carbon footprint.
Cost of energy = Energy consumption (in kWh) X Cost per kWh unit (£).
As of 2023, the business electricity prices in the UK are £0.31 per kilowatt hour (kWh).
This rate includes a standard VAT of 20% and an additional CCL (Climate Change Levy) fee – green energy prices charged to businesses. The current CCL fee is £0,78 per kWh.
Besides the electricity prices per kWh, your energy bill also includes a fixed standing charge. This is designed to cover the national grid maintenance and keep you connected to the energy network. It is a fixed daily rate that is charged, regardless of your business’s electricity usage.
Additionally, business electricity unit costs are determined by other factors, such as:
Overall, the average prices per kWh for businesses can vary. It’s worth mentioning that the unit cost can also be influenced by external factors, such as natural disasters or wars. These elements have the potential to drive up wholesale energy prices that can impact your energy bill.
A kVa, or kilovolt-ampere, is a unit used to measure the apparent power in an electrical system. Unlike kilowatt hour (kW) – which shows the actual power consumed – kVa takes into account both the real (kW) and reactive power.
In simpler terms, our devices and machinery do not always run optimally (at full energy capacity), which leaves space for ‘gaps’ in the electrical system. The kVa measures the device’s actual output (kW) as well as the ‘gap’ (reactive power/kVAR) and accesses the total capacity size of equipment needed to support energy supplies.
When you combine these two ‘powers’, you get kilovolt-ampere (kVa).
For businesses, understanding kVa is crucial as some electricity providers may charge based on the kVa demand in addition to the energy costs per kWh. A poor power factor can result in higher kVa, leading to increased energy costs due to the excess capacity needed to meet the reactive power demand.
Here is a quick summary between kW and kVa.
The main difference between kW and kVa is the power factor (PF). Power factors describe how well electricity is used to do useful (‘real’) work. A power factor of 1 means electricity is being used efficiently; while a power factor less than 1 indicates that some electricity is going to waste.
A quick guide for these formulas:
kW ÷ kVa = PF
For example: 160 kW ÷ 250 kVa = 0,64 PF
In the UK, it is imperative that you understand your business electricity prices per kWh. Understanding the difference between kWh, kW and kVa allows you to manage your business energy costs and operate at optimal efficiency.
If you are considering switching business energy suppliers, let Business Energy Comparison help you with all your business utility needs. Our team of expert energy brokers can assist you in comparing prices from various business energy suppliers – for business gas and electricity – to help you source the best deal for all your SME or large business requirements!
The two most important costs that make up business electricity tariffs are:
As of July 2023, the unit price per kWh for businesses is as follows;
Yes. The UK government has implemented the Energy Bills Discount Scheme for eligible non-domestic customers for a 12-month period from April 2023 – March 2024. This discount scheme provides reduced energy costs based on wholesale prices per kWh in the energy market and is subject to a maximum discount.
Electricity prices per kWh can receive a maximum discount of £19,61 per MWh if the wholesale price threshold exceeds £302 MWh. A maximum discount of £6,97 per MWh for gas may be applied if the wholesale price threshold exceeds £107 MWh.
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