Understanding Energy Tariffs: A Guide to Choosing the Right One for Your Business
Apr 21, 2023
As a business, it’s essential to understand your energy tariff and choose the right one to avoid paying more than necessary for your energy bills. But with so many different tariffs available, how do you know which one is right for you?
In this blog, we’ll explain the different types of energy tariffs, how to compare them, and provide tips on how to choose the best one for your business.
Types of Energy Tariffs
Before we dive into how to choose the right energy tariff, let’s start with the basics. There are four main types of energy tariffs available for businesses:
Fixed Tariffs – A fixed tariff means that the price you pay for your energy is fixed for a set period of time. This means that you’ll pay the same amount for your energy regardless of any changes to the market price. Fixed tariffs are a popular choice for businesses as they provide certainty and stability in energy costs.
Variable Tariffs – A variable tariff means that the price you pay for your energy can fluctuate depending on the market price. This means that you could end up paying more or less for your energy bills depending on the market conditions. Variable tariffs are typically not the best choice for businesses that want certainty.
Time of Use Tariffs – A time of use tariff means that the price you pay for your energy depends on the time of day that you use it. This means that you can save money by using energy during off-peak hours when the price is lower. Time of use tariffs can be a good choice if you have flexible energy usage and can adjust your energy usage patterns.
Renewable Energy Tariffs – A renewable energy tariff means that the energy you use is sourced from renewable sources, such as wind or solar. These tariffs are a good choice if you want to reduce your carbon footprint and support renewable energy sources.
Comparing Energy Tariffs
Now that you know the different types of energy tariffs available, it’s time to compare them to find the best one for your business. Here are some factors to consider:
Energy Usage – The amount of energy your SME uses is a crucial factor in determining the right energy tariff. Make sure you have an accurate understanding of your energy usage before comparing tariffs.
Contract Length – Energy tariffs can have different contract lengths, ranging from one year to five years or more. Consider how long you want to commit to an energy tariff before making a decision.
Tariff Price – The price of your energy tariff will be a significant factor in your decision-making process. Make sure you compare prices from different suppliers to ensure you’re getting the best deal that suits your business’s needs.
Additional Fees – Some energy tariffs may come with additional fees or charges, such as exit fees. Make sure you understand these fees before committing to a tariff.
Choosing the Right Energy Tariff
Now that we’ve discussed the different types of energy tariffs and considered the factors mentioned above, it’s time to choose the right one for your business. Here are some tips to help you make the right decision:
Consider Your Energy Usage – As mentioned above, your energy usage will be a crucial factor in choosing the right energy tariff. Make sure you have an accurate understanding of your energy usage and choose a tariff that suits your usage pattern.
Look for a Good Price – We know that price will always be a significant factor in choosing an energy tariff. Make sure you compare prices from different suppliers and choose a tariff that offers the best option for your needs.
Check the small print – Looking for a better suited energy contract can be a challenge as there are lots of terms and options to understand. It’s really important to check any small print when it comes to your tariff and ensure what you’re signing up to actually mean what it says.
Use an Energy Consultancy – Along with saving you time searching the market yourself, working with an energy consultancy can also help you find the best energy contract for your business. We have strong supplier relationships, we have access to a tariff database and can identify the key things you need to know about your energy contract, including any small print that may affect your spending in the future.
You know your business and we know energy. If you are thinking of switching energy suppliers and contracts or your renewal window is approaching, reach out to our team. We can discuss your current usage, energy spend and what options are available for you.