How Business Electricity Rate Insights Help to Crack the Code to Cost-Efficiency

Business Electricity Rate Insights

Streamlining your business operations to improve efficiency means reducing operating expenses by cutting unnecessary costs. While utility bills are necessary for your company’s operation, they can be relatively expensive.

Although considered a fixed expense in business, understanding business electricity rates and taking proactive measures can help you reduce your electricity bills. Before you consider switching energy suppliers, here are a few key insights to help you find a better deal and reduce your electricity costs.

Understand the Tariff Structure

Whether you run a micro-enterprise or a large business, knowing the different types of business electricity tariffs is crucial to keeping costs down. Understanding the tariff rate structure before agreeing to a new contract is important, as each rate has pros and cons and may not fit your needs or budget.

Compared to domestic tariff rates, fewer energy tariff options are available for businesses. However, you can find business electricity rates from top providers that are designed to fit and meet your business needs. Using comparison websites or reputable energy brokers can help you find a suitable business energy contract to suit your needs. Which electricity tariff options are available?

Fixed-rate Tariff

Energy charges include a standing charge, a fixed daily charge, and a unit rate for each kWh used. Opting for fixed-rate tariffs locks in the unit costs and standing charges for the length of your contract. A fixed-rate tariff protects you from unexpected wholesale price changes, meaning you will continue to pay the same rate for the length of your contract.

Remember that this does not mean your energy bill costs will remain the same every month; you will be charged for the amount of gas and electricity your business consumes. Fixed-rate tariffs can last from one to five years for businesses.

Variable Rates

Variable rate tariffs are standard energy rates that change according to wholesale energy market prices. If the wholesale costs increase or decrease, how much you pay for the unit rate will rise or fall accordingly. Variable-rate tariffs are often more expensive than fixed-rate tariffs.

Flexible Energy Tariffs

Flexible energy tariffs allow large enterprises more control over their energy purchases for the upcoming months, usually when energy costs are low.

However, the risk of flexible energy tariffs is that increased wholesale market prices will impact the costs of buying. It is crucial to be cautious; if your business is caught out-of-contract, the high energy prices could be a massive financial risk.

Out-of-Contract Rates

When your business energy contract ends and you do not choose a new contract, you will be charged the out-of-contract rate. This usually includes when you tell your energy supplier that your contract will not be renewed until you accept a new one. Out-of-contract rates have the benefit of enabling supplier switching.

Rollover Rates

Rollover energy contracts are an automatic agreement with your energy supplier when your fixed-rate energy contract expires.

A rollover tariff is brutally expensive, legally binding, and leaves you tied to this contract for at least 12 months unless you move premises. It is crucial that you keep track of your renewal periods to avoid being tied to a rollover energy contract.

Learn How Your Business Consumes Energy

Conducting a commercial energy audit can help you see how your business consumes energy. Energy audits help pinpoint where energy is wasted and provide insight into areas where improvements can be made and energy-saving measures your company can employ to reduce costs.

Energy audits could include a telephonic audit, internal audit or a physical inspection of your commercial building, breaking down how energy is used and will help identify areas where you can conserve energy.

A professional will look into how your business uses energy by considering factors such as lighting, heating and cooling, and electrical equipment. Conducting an energy audit and implementing the recommended changes could significantly reduce your business electricity bill.

Implement Energy-efficient Measures

Implementing energy-efficient measures in the workplace can significantly reduce your energy bill. What some would consider as insignificant changes like switching to LED lightbulbs or sensor lighting, turning off and unplugging unused appliances and equipment, and performing regular maintenance can significantly impact your energy consumption.

Switch to Renewable Energy

You can choose from a number of renewable energy sources, including hydropower, solar and wind power. However, before making a decision, it’s important to make sure that your building, your lease, and the location of your business are compatible with your chosen renewable energy source.

Businesses that produce their own renewable energy are given various grants and incentives by the government. For example, the Renewable Heat Incentive (RHI) Scheme offers financial incentives to companies that produce heat using solar thermal systems, biomass boilers, and heat pumps. These incentives for businesses may partially offset the hefty installation costs.

If generating your own renewable energy is not an option, most energy suppliers offer green energy tariffs or contracts. This means that some or all electricity your business consumes comes directly from renewable generators. Switching to a renewable energy source can benefit your business in the long run.

Final Thoughts

The ultimate goal for every business is to save money without cutting corners and disrupting their day-to-day operations. Understanding which business tariffs are available, conducting an energy audit, and implementing energy-efficient measures can positively impact your electricity bill.

Long-term energy-efficient strategies include investing in renewable energy sources or switching to a green energy contract. Both are viable options that assist in cracking the code for business cost-efficiency.