Understanding Your Energy Bills: Capacity Charges
15 March 2024
Understanding KVA Capacity Charges and How to Save Money
If your business is looking to better understand kVA capacity, why it appears on your electricity bill, or how to reduce kVA capacity charges, this guide explains everything in clear, practical terms. Many British businesses pay more than they need to simply because their contracted kVA level is set too high. A simple kVA capacity review can often identify quick, meaningful savings.
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
Why kVA Capacity Charges Matter
kVA charges often make up a significant portion of a commercial electricity bill -- especially for manufacturers, warehouses, and businesses with large equipment. If your kVA allowance is higher than your actual needs, you are overspending every single day.
This is why understanding kVA capacity is essential for any business looking to control and reduce energy costs.
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 to identify periods of high energy use (or use an electricity footprint report, like those which are available through our online portal).
- 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.
Requesting a kVA Capacity Review
If your usage data suggests your allowance is higher than required, the next step is a kVA capacity review. This involves analysing your historic consumption and comparing it against your contracted level.
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.
- Reduction process: This is a free service as it doesn't involve physical changes to the network.
- Important consideration: Be mindful that future capacity increases might incur charges as the initially reduced capacity might have been allocated to others.
Key Takeaway
Your kVA capacity ensures your business has access to the electricity it needs. However, if your contracted level is higher than your actual demand, you're likely paying unnecessary charges.
A structured kVA capacity review can:
- Identify wasted capacity
- Highlight opportunities for savings
- Show you exactly how to reduce kVA capacity charges safely and effectively
- Reducing capacity doesn’t affect your supply reliability when done correctly, it simply lowers your fixed charges.
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.
Leave your details and we will contact you about reducing your capacity charges
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