Do you know the real kWh cost of your business electricity?
In this blog, we look at some handy tips to help understand kWh and your business electricity cost per kWh. Understanding kWh will help save on energy cost and energy consumption – all very useful to help reduce our carbon footprint!
So what is a kW and what is a kWh?
A kilowatt (kW) is a universal measure of power. A kilowatt hour (kWh) is a measure of how much energy you’re using.
A kWh doesn’t actually measure the number of kilowatts in an hour. It simply provides a measurement of the energy you would use if a 1,000 watt appliance ran for 1 hour. For instance, a 100 watt light bulb would need 10 hours of usage to reach 1 kWh.
Your business electricity supplier charges you by how much electricity you use per kilowatt hour (kWh).
The more kWh you use, the more it costs. But how much does 1 kWh of electricity cost?
To simplify the issue, let’s consider a Mars bar. Within a Mars bar, there are a set number of calories. In this analogy, calories are the same as kWh. How you use those calories – i.e. burning the calories off – is the kW.
The healthy option is to burn off the energy quickly. To do this, you might want to do some high-intensity exercise. Alternatively, you may decide to nap instead, which will stretch the energy out a little longer.
In a similar way, the electricity cost per kWh that you pay depends on how long you keep your machines running. It’s why leaving a TV on standby or leaving a charger plugged in continues to draw power. This excess energy will add to the kWh cost on your monthly bill.
An example from light bulbs
If we collect ten of our previous 100 watt light bulbs, we would get 1 kilowatt.
If we want to calculate our daily kWh cost for these lights, the calculation is simple enough.
We multiply our 1 kilowatt (ten bulbs) by the number of hours of usage and then by the electricity cost per kWh.
Let’s say we use the lights for 9 hours, and the average kWh rate is 0.163p*. Our calculation would therefore look like this:
9 (hours) x 1 (kW) x 0.163p (electricity cost) = £1.47 per day
It’s as easy as that! This calculation will also apply to your gas consumption too.
However, when applying this rule to your gas, the unit costs will be different. You can check the latest figures here.
What determines electricity cost per kWh?
The cost of kWh varies depending on your business energy supplier, tariff, meter type or region type.
There are two main factors that businesses can focus on when comparing your electricity and gas tariffs:
- The unit rate – typically shown in kilowatt hours (kWh), the unit rate is the amount you’re charged for the energy you use.
- The standing charge – a flat fee charged daily, irrespective of you using any gas or electricity. This goes towards the work needed to get the energy to your premises.
When comparing business energy deals, it’s important to check these rates carefully. Whilst a tariff might have a low kWh unit rate, the price of the standing charge may be higher. It’s always good to check before you sign up.
In reality, saving on your business energy costs doesn’t necessarily need to be complicated. Businesses can often enact some changes themselves. It can be as simple as checking for air leaks, replacing dirty filters, servicing motors, powering off standby electronics or turning off the lights.
These small steps will add up to larger savings in the long run.
Another, more detailed way to discover energy efficiency opportunities is to secure a business energy audit. This will systematically identify and analyse the exact uses of energy in a process, clearly identifying opportunities to reduce energy cost and eliminate wasted energy.
Two steps to save your business energy today
Step 1 – Get in the habit, now
Firstly, all good habits need to begin somewhere. Once you know your kW from your kWh, and you know where to look for energy savings in your business, you can build a profile of your energy consumption. From there you’ll be able to reign in any wasted energy.
When are your periods of high consumption? Which machines are your most energy intensive? Are the lights left on after hours? What about laptops, monitors and TVs?
What if you moved your heavy lifting to off peak hours? Using energy between 4pm – 8pm is considered peak time for the grid. During this period, you will pay the highest rate for your energy consumption, which is typically 20 to 40% more expensive than other times of the day.
Switching your energy contract to a Flexible or Variable Rate contract, or cost averaging a longer term contract, may allow you to take advantage of lower energy prices depending on the time of day in which you use your energy.
Step 2 – Compare BusinessEnergyQuotes.com!
Secondly, it’s very likely that you could switch business energy suppliers to make cost savings. If you haven’t taken advantage of switching energy suppliers at the end of your contract, you could be due a substantial saving.
It’s vital to be aware of any potential energy savings for your business. You should periodically check on BusinessEnergyQuotes.com to compare your deals against the providers on the market. This will ensure you’re never overpaying for your energy.
Knowledge is power
An understanding of how much you actually spend on your energy, and on which appliances, is powerful. You’ll be able to:
- Save money: when you’re aware of the difference between kW and kWh, you can work out how to become more energy efficient. We all need to be energy intensive from time to time. But knowing how much it costs in cash terms encourages you to be more mindful of your energy footprint.
- Cut your carbon footprint: a deeper insight into your energy use or average kWh per day, will show you where you really need energy and where you’re potentially wasting it.
Understanding your energy consumption can be done manually by calculating your kWh spend.
Alternatively, you can use Energy Software as a Service (ESaaS). ClearVUE. Lite is a best-in-class subscription-based software which remotely analyses the last 14 months of your energy data, without any intrusive hardware – something no other platform is able to do.
With a subscription to ClearVUE. Lite, businesses can instantly get detailed insights into multiple sites’ consumption over the past 14 months. This process used to be invasive and lengthy, often requiring site visits and expensive hardware. But with ClearVUE. Lite’s cloud-based technology, you can now monitor your business’ consumption remotely in just a few clicks.
ClearVUE. Lite is dedicated to helping businesses minimise wasted energy and improve their carbon footprint. The ultimate goal is to achieve net zero carbon.
Also, don’t forget to check out how we’re helping businesses achieve Net Zero.