Compare Large & Industrial Energy Prices
Although all businesses differ in many ways, they share one common goal of wanting sustainable energy at low prices. This way, only a tiny portion of their revenue goes towards electricity and gas. As a result, they can grow their customer base through development to become more successful. Whilst both large and industrial businesses have a high energy demand, the latter is even more significant and requires energy on a much larger scale. Due to this, their energy prices vary, and they can benefit from different tariffs.
Compare Large & Industrial Energy Prices
A large business is classified by having between 250 and 500 employees, using over 50,000 kWh of electricity and 65,000 kWh of gas (or over 100,000 kWh combined), or earning up to £1 million in revenue per annum. Examples of large businesses could include hotels, popular restaurants, clothing shops or malls, whereby there are many more employees than an average business, and locals frequently visit them. Nevertheless, they are not classed as industrial because they are not international businesses, nor do they greatly influence society.
Commercial energy is, on the whole, more expensive than domestic energy, and the energy bills of large businesses and higher than those of small businesses.
This is clear. However, what is often overlooked is that the energy tariffs for large businesses are much cheaper than those of small businesses due to many factors. Firstly, larger businesses are considered more ‘reliable’ because they have a loyal customer base and have proved that they can rake in high revenue, making them more attractive to energy suppliers. Subsequently, they are often offered more extended contracts of 5 years in contrast to the six-monthly or yearly ones that other businesses utilize.
It is advised for large businesses to use variable tariffs or fixed flexible tariffs. This is because they do not require the same security as the fixed tariffs, where the unit rates stay the same throughout the contract, and there is no influence from the wholesale market.
In comparison, variable tariffs can fluctuate, either increasing or decreasing, based on the competition in the market. This is valuable for larger businesses as they can save money when the unit rates decrease, yet they can still afford to pay their energy bills if they increase. Furthermore, they can utilize either hourly or half-hourly smart meters, allowing for more accurate and hence cheaper energy bills.
On average, the unit rate for electricity for large businesses is 13.24p per kWh, and the standing charge charged when the minimum threshold is not reached is around £29 per day.
On the other hand, industrial businesses are classified as those that earn over £1 million in revenue, employ over 1,000 people or have a gas and electricity consumption of over 200,000 kWh or 50,000 kWh, respectively. Industrial business energy accounts for approximately a quarter of the energy supply in Europe. So as much of it as possible needs to come from renewable resources to be sustainable and eco-friendly.
Industrial businesses are required to use half-hour (HH) smart meters. These are modern meters that have popularly replaced traditional meters. Instead, they do not require manual readings and send the energy consumption data from electricity and gas to the energy supplier company. Consequently, the data sent is more accurate, and the business energy prices are no longer just estimates. This is key for industrial businesses because thousands of pounds can be saved by providing more accurate information in kWh sent every half an hour.
Industrial businesses, just like large businesses, can benefit from variable rate contracts. However, as industrial businesses are much more significant, they occupy much more land and thus can construct their renewable energy farms which harness wind or solar power. Not only is this cheaper, but the excess which is not used can be sold to the National Grid; this is called an export tariff. Usually, the tariff is 6p per kWh for electricity, although this varies between suppliers and should be researched further.
Additionally, industrial businesses are offered interruptible contracts. Essentially, this means that the business’s energy supply is cut down as times of peak demand, whereby the rest of the world uses the most energy. For example, domestic customers often use more energy around 6 pm when they are making dinner, whilst this is the time that most businesses shut down. Therefore they do not need to have as high a demand for electricity. This decreases the unit rate costs at peak times.
Compare Large & Industrial Energy Prices – to Conclude
In conclusion, large businesses and industrial businesses are classed by different factors, and as a result, they can benefit from different tariffs and are charged different rates.
Find out more about switching business energy providers here.
Other useful links about Business Energy
Crown Gas and Power
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