Why kVA capacity management is just as critical as reviewing your commodity cost
Many businesses pay for more “capacity” from the grid than they actually use or require.
This is known as Available Capacity “KVA”
Reducing kVA is one way of reducing energy charges and gives businesses another opportunity to take a proactive approach to energy management and procurement.
A practical starting point is improving equipment efficiency. Inefficient systems draw more power than necessary, increasing overall demand. Common areas to review include lighting, heating, air conditioning, and office equipment. In more specialised operations, attention should also be given to fridges, large printers, manufacturing machinery, and industrial heaters to ensure they are properly optimised.
Power factor correction is another effective way to reduce kVA. This involves installing equipment that minimises excess reactive power (kVAR) drawn from the grid alongside the real power required for operation.
There are additional ways to reduce kVA demand, and working with an energy specialist can deliver measurable savings within defined payback periods.
Over the past decade, third-party costs have risen significantly. Ten years ago, they accounted for roughly 30% of the average electricity bill; today, they represent closer to 60%. With energy prices at record levels, understanding these costs — and how to manage them — is more important than ever.
Breakdown of third-party costs
Network costs
TNUoS (Transmission Network Use of System)
This charge is applied by the Network Operator and covers the cost of transporting electricity from power stations to the Distribution Network, as well as maintaining and developing the national transmission infrastructure.
Contribution to total cost: 5.7%
DUoS (Distribution Use of System)
This charge covers the delivery of electricity across the local Distribution Network to your premises, including the maintenance and ongoing development of that network.
Contribution to total cost: 11.3%
BSUoS (Balancing Services Use of System)
This charge supports the balancing of electricity supply and demand across the grid, ensuring sufficient generation is available when needed.
Contribution to total cost: 2.9%
Environmental Costs
RO (Renewables Obligation)
Introduced in 2002 across England, Wales and Scotland — and in Northern Ireland in 2005 — the Renewables Obligation was the UK’s primary mechanism for supporting large-scale renewable electricity generation. Although the scheme closed to new applicants in April 2017, it continues to appear on energy invoices.
Contribution to total cost: 17.6%
FiT (Feed-in Tariff)
Launched in April 2010, the Feed-in Tariff encouraged households and businesses to generate their own renewable energy through technologies such as solar panels and wind turbines.
Contribution to total cost: 4.7%
CfD (Contracts for Difference)
A long-term agreement between an electricity generator and the Low Carbon Contracts Company (LCCC), the CfD mechanism stabilises generator revenues at a pre-agreed “strike price” for the duration of the contract. Payments may flow from LCCC to the generator to maintain this price.
Contribution to total cost: 7.6%
CM (Capacity Market)
The Capacity Market ensures participating generators and assets are available to respond during periods when the electricity system is under stress. While such events are uncommon, participants must remain ready to supply power when required.
Contribution to total cost: 1.6%
CCL (Climate Change Levy)
The Climate Change Levy is a tax applied to business energy consumption in the UK, charged on electricity and gas at the point of supply. Introduced in 2001, its purpose is to promote energy efficiency and reduce carbon emissions.
Contribution to total cost: 5.4%
