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Guide to Large and Industrial Business Energy
This guide explains how to manage large or industrial energy, the various types of contracts available and energy efficiency measures to help reduce consumption.
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What qualifies as a large business?
With energy, your consumption level determines whether your business is classed as small, medium or large. Your business will be classed as large by energy suppliers if it consumes:
- More than 55,000 kWh of electricity per year
- More than 200,000 kWh of gas per year
Whether your business is gas-intensive, electricity intensive, or both, it’s likely your energy bills account for a large proportion of your overheads. To make sure you're getting a fair price, call us on 0800 158 3710 and we can do a comparison for you.
What type of contract does a large and industrial business need?
Your increased consumption means you’ll need multiple meters to to generate your supply. Costs can spiral as you’ll need multiple energy contracts. If you need helping managing these, we can handle renewals for all of your meters so you have one convenient contact. Call us on 0800 158 3710 for more information.
Typically, both high gas and electricity users are offered two contract options: fixed and flexible contracts.
A fixed contract allows you to fix the price you pay for the wholesale cost of your gas or electricity for a specified period – usually between one to four years. This will protect you from fluctuations in energy market prices, although your bills will naturally vary depending on how much energy you use.
Your supplier can provide a forecast of what they expect third-parties to charge during this time – this includes maintenance and environmental costs. A fixed contract means you’ll be able to estimate your outgoings for the length of your contract manage your overall budget more easily.
A flexible contract allows you to closely monitor the energy market and change the rates you pay according to price fluctuations.
On the plus side, you have control over your energy bill, along with price transparency, but the drawback is that you’ll need to spend more time managing your energy bill.
You will however, have the option to fix your rates and unfix them when you choose, depending on what you’ve observed from energy market conditions.
Interruptible contracts give the National Grid or your local distributor the authority to temporarily cut off your supply during peak times and periods of high demand.
There are pros and obvious cons to this contract. They are cheaper than standard contracts but the fact your energy supply can be stopped, could have a significant impact on your business activities. If you operate during those peak times, you may also end up with a considerably high bill.
Large site peak day demand
Large site peak day demand is the sum of Supply Offtake Quantity (SOQ) for large sites.
Also know as the Maximum Daily Quantity (MDQ), the SOQ is the maximum daily consumption allowed for any one supply point. A supply point is the meter at which the National Grid or your local distributor makes energy available for your energy supplier.
SOQ refers to the maximum daily amount of energy – both electricity and gas – that you’ll be allowed to consume from any one meter. If you exceed your SOQ (measured in kWh), your supplier may charge you a penalty. To prevent this, you may qualify for a ‘large supply point’, which makes available energy that is equal to or exceeds 732,000 kWh per year.
Peak demand is the highest daily or monthly consumption across the network in a set period and for big business energy customers, often dictates the price of energy.
When peak demand rises, energy prices tend to rise with it as it costs energy suppliers and distributors more to supply energy to everyone at periods of high demand. However, businesses that consume significantly large amounts of energy may benefit from lower prices, as suppliers are inclined to offer cheaper business gas and business electricity rates in an effort to secure high-consuming customers.
How do I reduce my business energy bills?
Any way in which you can reduce the amount of energy that you use can have a significant impact on your business’s bottom line. Here are a few ways in which you can control your business energy bills more closely.
- Conduct an energy audit
- Use energy efficient lighting
- Use energy efficient computers
- Convince your staff to go green
- Install energy generation technology
You could also save up to £970* on energy by switching contracts. For more information, call us on 0800 158 3710.
Other ways to reduce your business energy bill
The government’s Feed-In Tariffs (FITs) and Renewable Heat Incentive (RHI) schemes applies to businesses and households that install renewable or low carbon technologies at their property. The FIT scheme is dedicated to electricity-generating technologies while the RHI scheme is dedicated to heat-generating technologies.
With the FIT scheme, your chosen FIT Licensee will pay you for the electricity you generate, and you can also sell back any excess electricity to the National Grid, using this income to offset charges on your electricity bill. With the RHI scheme, the government will provide a fixed subsidy payable over twenty years provided you have installed renewable technologies eligible under the scheme.
Exemptions for the climate change levy
Your business energy bill will include the Climate Change Levy (CCL) – a government-imposed charge for all business energy users using 33kWh or more of energy each day. The CCL is designed to encourage businesses to reduce their carbon emissions and to take steps towards energy efficiency. If your energy use involves mineralogical and metallurgical processes, you are 100% exempt from paying the CCL.
You may also be able to apply for an exemption from the CCL if you take steps to improve energy efficiency by signing up to the Climate Change Agreements (CCAs) or the CRC Energy Efficiency Scheme (CRC Scheme). CCAs are voluntary agreements taken by energy-intensive businesses to receive up to a 90% reduction in the CCL if they agree to meet certain energy efficiency targets as agreed with the government. The CRC Scheme is designed to incentivise energy efficiency and reduced carbon emissions in large energy users.
If you get your energy from eligible renewable sources or use combined heat and power (CHP), you may also be exempt from the CCL. Alternatively, you could look for a supplier that only provides low-carbon energy, helping you qualify for CCL exemption.
Our Business Energy Efficiency guide has more information about saving energy as a large or industrial business.
Visit Ofgem's website for more information on the business energy market
To ensure you’re getting the most from your energy contract, speak to our Major Business team. We can ensure that you’re on a great bespoke deal, based on your needs and could save you money in the process.
Fill in the form to find out more or call 0800 158 3710
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