Whether starting a new business or searching for ways to save costs in an existing one, it’s critical to shop around for business energy. You can check out Business Energy Comparison for more details if you want to know more.
Another option is to sign up for a time-of-use tariff, which can help you keep more money if you use power when it is the cheapest. It is one alternative accessible to business owners.
We explain what time-of-use tariffs are and analyze their benefits and drawbacks so you can decide if they are the best option for you.
What is a time-of-use tariff?
Peak times typically result in higher wholesale energy prices – a fundamental matter of supply and demand. As a result, energy suppliers prefer to pay more for energy throughout the day, which is often the most expensive due to high demand.
On the other hand, energy costs less outside peak hours, so some energy providers offer time-of-use tariffs that charge lower rates to businesses for electricity used during off-peak hours.
On these tariffs, the price of each unit of energy might change throughout 24 hours. It can even switch on various days of the week.
A time-of-use tariff could save you money if your company can be flexible regarding how and when it uses energy. For example, you could change your routines and processes to use less energy during peak hours for some or all of your vital energy-consuming activities.
To be on a time-of-use electricity tariff, you must have installed a half-hourly (HH) or smart meter.
What are Half-hourly (HH) meters?
Half-hourly (HH) meters are also half-hour pre-payment meters, half-hourly meters, or just pre-payment meters.
Your energy supplier receives half-hourly readings from an HH electricity meter instead of every 30 days or once a month, as with conventional meters.
This means your meter will need to be read every 15 days instead of once a month. In addition, you’ll receive bills based on this new reading schedule instead of receiving a single statement every month for all your usage over the past 30 days.
This automated method allows you to correctly monitor your energy consumption and the times when your business consumes the most energy, assisting you in looking for ways to use it more efficiently.
With a half-hourly meter, you can also pay for your energy based on how much you use during peak times. For example, between 7 pm-10 pm, Monday to Friday.
This allows you to limit the amount of money you spend on electricity during these peak times when the costs are highest.
But, the main disadvantage of using a half-hourly meter is that it doesn’t give you an accurate picture of how much electricity you’re utilizing over 24 hours.
For example, if you use more than one appliance at once or leave devices plugged in all day, such as computers or televisions, this could cause your bill to be higher than expected.
Certain establishments must have an HH meter installed by law.
Large organizations, for example, that use more than 100kW of electricity in a half-hour period must have an HH electricity meter.
Factories, supermarkets, big offices, and warehouses are examples of businesses in this category. If your company uses 70kW or more of electricity in a half-hour period, you can have an HH meter installed.
But, if you’re unsure whether you already have an HH meter, look at your supply or “S” number on a recent electricity bill. You already have one if it starts with 00.
What are smart meters?
Businesses that do not have an HH meter can instead install a smart meter.
These meters are self-contained units that transmit electricity usage information to the utility company. They send this information using radio waves, which means suppliers can read them remotely without someone coming out to the building.
Smart meters typically have a display screen that shows you how much energy you’re using and what time it is. That way, you can find out if something unusual affects your energy use.
These meters provide customers with more detailed information about their energy use than traditional meters, which only record the total amount of electricity used in kilowatt hours (kWh).
As part of the government’s deployment, all UK businesses and families must be supplied a smart meter by the end of 2024, and this date may be pushed back due to the coronavirus epidemic.
Is a time-of-use tariff right for you?
Consider whether a time-of-use tariff is the best option for you before committing; otherwise, you may pay more than you did on your previous tax.
If your company utilizes a substantial share of its energy during off-peak hours or is flexible enough, you may save a lot of money.
Having an HH or smart meter and being rewarded with time-of-use pricing may also encourage you to plan how to use your energy more efficiently as a business. The more efficiently you can utilize energy at any time of day, the more money you can save on your expenses.
As a bonus, time-of-use pricing will help to relieve peak-time strain on the UK energy infrastructure.
However, if you must consume most of your energy during peak hours, time-of-use rates may be more expensive than other tariffs.
How do you switch to a time-of-use tariff?
If interested in time-of-use rates, speak with your power provider about switching to one of these contracts.
Before switching to a time-of-use business rate, ask your supplier how it will work so you can plan ahead of time. If you are in a contract with your current provider, check what suppliers might charge exit fees before you decide to switch.
Also, as with any financial transaction, evaluate the tariffs you provide before transferring. You can do this by using our comparison tool, which allows you to compare all the different ones available in your area.
Once you’ve let your supplier know you want to switch, they will advise you on how long the process will take. It takes about two weeks from when you request a switch to when it happens, so don’t worry if you don’t see any changes immediately.
With much misinformation, it can be hard to understand what time-of-use tariffs are and how they can benefit your business.
Time-of-use tariffs can give businesses greater flexibility while driving down their energy costs. In short, companies that use these time-of-use tariffs should have more control over their energy budget.
When deciding whether or not time-of-use tariffs suit you, there are many different aspects to consider, but it can be worth your time to examine them further. So check out this article to clear some things for you.