3 December 2025

Understanding Your Energy Bills: Capacity Charges

Understanding KVA Capacity Charges and How to Save Money

KVA capacity charges are a vital, yet often confusing, aspect of your electricity bill. This article explains what they are, how they are used, and how you can potentially reduce them.


What are KVA Capacity Charges?

Imagine your electricity supply like a motorway. KVA (Kilo Volt Amperes) represent the width of the lane allocated to your business. This reserved space ensures you have enough power to meet your peak demands, whenever needed.

These charges reflect the cost of maintaining this dedicated capacity on the grid, even if you don't use it all of the time. They are set by your local Distribution Network Operator (DNO) and are billed separately on your electricity invoice.


Example:

  • A manufacturing plant has a high-power demand during operation.
  • The DNO allocates a capacity of 50 KVA to ensure the plant has sufficient power readily available.
  • This translates to a daily charge (based on the current rate) of: 3.18 pence/kVA * 50 kVA * 1 day = £1.59


Reducing KVA Capacity Charges

Here's the good news: You can potentially lower your KVA charges by optimising your power usage:


  • Monitor your consumption: Analyse your meter readings and HH data to identify periods of high energy use
  • Spread the load: Try to distribute high-power activities throughout the day, instead of concentrating them in short bursts.
  • Shift tasks: Schedule non-critical tasks for off-peak hours when there's less demand on the grid.
  • Upgrade equipment: Consider investing in energy-efficient equipment that consumes less power.


Lowering your KVA Allowance

By contacting your DNO, you can formally request a reduction in your allocated KVA capacity. This essentially reduces the width of your reserved lane on the grid.

The reduction process is a free service as it doesn't involve physical changes to the network but it's important to consider that future capacity increases might incur charges. As such, it's valuable to know how the consumption of each meter within the business is likely to change over the coming years.


Key Takeaway

KVA capacity charges ensure you have reliable access to the power you need. However, by understanding your consumption patterns and implementing strategic changes, you can potentially reduce these charges and save money on your electricity bill.

Additional Notes:



By implementing these strategies, you can gain better control over your KVA capacity and potentially achieve significant cost savings on your electricity bill.


If you would like your KVA charges reviewed to see if you can reduce your capacity charges, contact us today. We can conduct a free review to see if you’re a suitable candidate for reduced capacity charges.

February 2025 Review

by Craig Watson • 27 March 2026
With consumer spending declining and OFGEM raising their price cap, you would be forgiven for seeing February as a month where negative news was at the forefront, but in the energy markets, this was not the case.

2024 Review

by Craig Watson • 27 March 2026
In a year that began with falling energy prices, there were recurring catalysts that led to prices climbing steadily higher. Geopolitical uncertainty and the perennial threat of escalating conflicts meant fear would maintain a constant presence in the wholesale markets. We will look back at the key energy stories from 2024, and how the energy markets are likely to shape up in 2025. Quarter 1  The year began with cautious optimism as the UK’s gas reserve levels were healthy and prices for the Summer’24 season were in freefall. In February, prices pulled back to their lowest levels since 2021, and for the first time in a while, we identified that there was greater potential for upside risk than for further downward price movement: “ there now (exists) an asymmetrical element of risk should the market encounter a supply-side problem of significance. ” During February we had advised customers on flexible contracts that this was an ideal time for making purchases. March would see prices begin to ascend again as international conflict would create problems with LNG imports, and we would highlight the geopolitical risks as an area for concern moving forwards: “ fears remain and there are potential negative catalysts that could lead to prices rising further, with the main factors to watch out for being based on geopolitical unrest. “ For a business that purchases their energy in advance, this quarter was the optimal time for purchasing during 2024. In February, electricity prices for Winter’25 were down to 7.75p/Kwh, and as low as 6.05p/Kwh for Summer’25. Winter’25 ended the year with prices above 11.1p/Kwh, with Summer’25 prices exceeding 9p/Kwh. For a company that uses 500,000Kwh of electricity per month, the difference between buying at the February low point compared to today’s prices would represent a yearly saving of over £200,000.
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