Business Energy for Industrial Properties
What is a large or industrial business?
When it comes to energy, it’s consumption that determines whether your business is classed as an SME or an industrial enterprise.
If your business uses more than 55,000 kWh of electricity a year, or more than 200,000 kWh of gas a year, it will be considered a large or industrial operation, and energy bills will most likely account for a large proportion of its overheads.
So it’s vital you get the best gas and electricity prices for warehouses and industrial spaces, to make sure you’re not overpaying for the energy you use. The bad news is, it’s not quite as simple as just running a few quotes and picking the best one, the good news is the UKPower business energy experts are on hand to help.
If you’re ready to switch energy supplier, give us a call on 0800 326 5517, or leave us a few details here and we’ll give you a call back. If you’d like to learn more about electric and gas for industrial spaces, read on.
What energy contracts are available for industrial properties?
The high energy demand of your business will mean could need a half-hourly electric meter, or multiple meters, each with their own supply. If you operate across a number of sites, it could be worth switching to a multi-site energy deal, which puts each site’s energy supply into one package, with one supplier and one renewal date, to potentially save you time and money.
There are typically two types of contract offered to high energy use businesses: fixed and flexible.
What is a fixed contract?
If you take out a fixed contract, the rate you pay will be fixed for the duration of the deal, which is usually between one and four years – remember, it’s just the unit cost that’s fixed, so your bills will still fluctuate, depending upon how much energy you use.
Fixed contracts protect you against energy price rises, so even if every supplier on the market puts prices up, you’ll still pay the same rate throughout your contract. And to help with budgeting, your supplier should be able to give you an idea what you can expect to pay in third-party charges, such as maintenance and environmental costs, during the course of your deal.
What is a flexible contract?
Agreeing to a flexible contract means the price you pay per unit of gas and electricity can go up or down, depending upon price fluctuations in the energy market. This means your energy bills could change, even if you use the same amount of gas and electricity each month.
A flexible contract should also come with the option of fixing and unfixing your rate when you choose, so you can effectively ‘play’ the energy market. On the plus side, this transparent pricing model gives you greater control over your energy bills, but it also means you’ll need to spend more time managing your energy bills – if not, you could easily end up paying over the odds if there is a spike in energy prices.
What is an interruptible contract?
You may also have the option of taking out an interruptible contract, which gives the National Grid or your local distributor the power to temporarily cut off your electricity supply during peak times and periods of high demand, to help ease pressure on the network.
The obvious disadvantage is that there will be times when your supply is interrupted, meaning it may not be suitable if you do a lot of business or have critical systems running during these peak hours. But if you can operate without these interruptions having much of an impact, the cheaper rates you pay for electricity could help to significantly cut your bills.
What is peak demand?
Peak demand is when energy supply is expected to be at its highest point over a set period of time, and is often used to help set energy prices for industrial businesses.
When peak demand rises, energy prices tend to rise with it, as energy suppliers and distributors pay more to supply energy to everyone during busier times. But as a large business owner, you may actually find your higher energy usage sees you offered lower prices, as suppliers sometimes offer cheaper business gas and business electricity rates to secure contracts from high-consuming customers.
What is large site peak day demand?
Large site peak demand is the maximum amount of energy your business can receive each day from any one supply point used by the National Grid or your local distributor. These supply points are the meters at which energy is made available for your energy supplier to pass on to you.
Also known as Supply Offtake Quantity (SOQ) or Maximum Daily Quantity (MDQ), your usage is limited to this maximum daily demand, and you could be charged a penalty for exceeding it. If this is a possibility, it’s worth finding out if you qualify for a ‘large supply point’, which makes available energy that is equal to or exceeds 732,000 kWh per year.
Are there any concessions for renewable energy?
If you use any renewable or low-carbon technology on site, you could benefit from the government’s Feed-In Tariff (FIT) and Renewable Heat Incentive (RHI) schemes.
- Feed-In Tariff scheme – Your nominated FIT Licensee will pay you for any electricity you generate, and you can sell back any excess electricity to the National Grid. This income can be used to offset charges on your electricity bill.
- Renewable Heat Incentive - The government provides a fixed subsidy, payable over twenty years, provided you have installed renewable technologies eligible under the scheme.
As far as concessions go, if your energy efficiency measures include signing up to the Climate Change Agreements (CCA) or the CRC Energy Efficiency Scheme, you may be eligible for exemption from the Climate Change Levy (CCL) – a government charge designed to encourage businesses to be more energy efficient.
- Climate Change Agreements – These voluntary agreements can see energy-intensive businesses get to a 90% reduction in the CCL by meeting certain energy efficiency targets, as agreed with the government. Find out more at GOV.UK.
- CRC Energy Efficiency Scheme – A mandatory carbon emissions reduction scheme that incentivises energy-intensive organisations for improved levels of energy efficiency and reduced carbon emissions. Find out more here.
If your energy use involves mineralogical and metallurgical processes, you are 100% exempt from paying the CCL.
If your energy comes from eligible renewable sources, or use combined heat and power (CHP), you may also be exempt from the CCL. Or if you get your energy from a supplier that only provides low-carbon energy, this could help you qualify for CCL exemption.