How much does business energy actually cost? What are the different kinds of tariffs and fees? And how can I save money on my bills? We answer these questions and more…
When you run a business premises, paying for energy to light it, cool it down, heat it up, and power its various equipment and appliances is unavoidable.
But what is avoidable is paying over the odds on a plan that doesn’t suit your needs and budget. It’s simply a case of making sure that you’re on the best rates and tariff for your business – and that you’re making the right savings.
The first step? Understanding how much energy rates actually cost, the fees you could be subject to, and the different tariff types you may have to choose between.
We understand that there are a lot of considerations to make, and there’s a lot of jargon out there. That’s why we’ve put everything you need to know about business energy rates, costs, and savings on this page, and explained it all in a simple, understandable way. Let’s dive in.
Which companies supply business energy in Australia, and how much do their plans cost?
To give you an idea of the kind of business energy plans you’ll be offered, we’ve gathered a sample of some of the best business energy suppliers in Australia, along with their rates, for you to compare.
NB: Business energy rates vary across the country. But because Sydney is widely considered to be the business capital of Australia, with 64% of Australian tech startups choosing to start life in the city, we’ve included rates and quotes for Sydney-based businesses in this table.
|Supplier||General electricity usage rates (per kWh)||Supply charge (per day)||Available discounts||Cheapest sample electricity quote (per year)*|
|Alinta Energy||21.63 cents||$1.82||31%||$4,988|
|EnergyAustralia||32.57 cents||$1.57 – $1.99||14% – 21%||$5,719|
|Momentum Energy||21.33 – 29.62 cents||$2.15||7% – 30%||$5,050|
|Origin Energy||28.98 – 32.93 cents||$1.58 – $1.80||10% – 12%||$6,372|
|Red Energy||25.73 – 32.60 cents||$1.53 – $1.96||21%||$5,703|
|Simply Energy||32.65 cents||$1.95||21 – 22%||$5,647|
|Tango Energy||24 – 31.90 cents||$1.55 – $2.35||15% – 26%||$5,366|
*For a Sydney-based small business using 20,000 kWh of electricity per year from the Ausgrid network
What is a business energy broker?
Put simply, an energy broker acts as the middleman between your business and the raft of energy suppliers all vying for your cash.
Usually, you’ll discuss your energy needs and budget with your broker, and they’ll go away and find the best quote they can for you. Many business energy brokers have access to lower rates that you wouldn’t be able to swing on your own.
You find the cheapest rates at no extra cost, the right supplier gains a new customer (your business!), and the broker is paid by the supplier for their work in matching you up. It’s a win-win-win!
At Expert Market, we can put you in touch with an excellent Australian business energy broker right away, through our free quote-matching service.
Just answer a few questions about your business and its energy needs (it only takes a minute), and Make It Cheaper, our trusted broker, will use your answers to find the best quote for you. It’s a totally free service that saves Expert Market customers an average of $1,837 per year on their energy bills. Why not give it a try?
How much do business energy rates cost?
The first thing to understand is the kinds of charges you’ll need to pay your supplier for your electricity and gas. Every supplier will charge you a variable usage rate, and a fixed daily supply charge. Let’s take a look at these rates in more detail:
1. Variable usage rates
This is the amount that you’ll pay for each unit of energy that your business uses. You’ll be charged per kWh of electricity, and per MJ of gas. Your usage rate can change depending on the type of tariff you choose, but don’t stress if you’re not sure what the options are – we’ll explain the different types of business energy tariff in the next section.
First, though, let’s get a broad idea of the figures by looking at the average usage rates for businesses in Australia.
Average usage rates for business electricity in Australia
In 2020, GlobalPetrolPrices.com recorded the following average electricity prices for different business sizes:
|Business size||Annual consumption||Average usage rate (per kWh)|
|Small business||Up to 30,000 kWh||22.40 cents|
|Small to medium business||30,000 – 150,000 kWh||34.20 cents|
|Medium business||150,000 kWh – 1 million kWh||31.40 cents|
|Large business||1 million – 7.5 million kWh||30.50 cents|
|Extra large business||More than 7.5 million kWh||29.20 cents|
Of course, energy rates vary from state to state, and they’re ever-changing. According to data from Energy Consumers Australia, the average SME electricity bill shrunk by 3% during 2020, with South Australia, ACT, Queensland, New South Wales, and Tasmania all seeing decreases in average electricity prices.
Meanwhile, though, WA and Victoria saw increases in average electricity prices for small and medium businesses. That said, businesses in Victoria are expected to benefit from dropping energy prices as 2021 progresses.
2. Fixed daily supply charges
This is a fixed amount that you’ll pay for each day that your business is supplied with energy. You’ll pay two separate supply charges: one for electricity and one for gas.
Daily supply charges for electricity usually sit between $1.50 and $2.50 per day, but it’ll depend on the supplier and plan you choose, and which part of the country you’re based in.
Business energy tariffs and contracts explained
The different types of business energy tariff
There are four different kinds of business energy tariffs available in Australia. The kind of tariff you plump for will affect the usage rates you pay.
Fair warning: the following will seem a little jargon-heavy at first glance. But don’t sweat, because we’re going to make it all easy to understand.
|Single rate tariff||Also known as a flat rate tariff, on a single rate tariff, you’ll always be charged the same usage rate – no matter the amount of energy you’re using, or the time of day or week you’re using it.|
|Block rate tariff||On a block rate tariff, your usage rate will change depending on how much energy your business uses. For example, your rate might drop or increase when you’ve used a certain amount.|
|Time-of-use tariff||On a time-of-use tariff, your rate will change at different times and on different days in response to peak and off-peak hours. In other words, you’ll be charged more for the energy that you use during weekdays, and less for the energy you use overnight and at the weekends.|
|Controlled load tariff||Controlled load tariffs only apply to appliances that are metered separately to the rest of your business – for example, an electric water heater that’s timed to run during off-peak hours.|
Electricity is available on all of the above tariffs. Gas is usually only available on a single rate tariff, but some suppliers also offer gas on a block rate tariff.
Within these four tariffs, there are also two key kinds of pricing that you should be aware of:
|Standing offer||Standing offer pricing entitles you to electricity rates that are regulated by the Australian government, and so are always capped at a certain amount. The cap varies by state, and so will depend on where you’re based.|
|Market offer||Market offer pricing is unregulated and uncapped, and set independently by your supplier.|
The different types of business energy contract
Now, in terms of actually signing the dotted line for your energy, there are two main types of contract available. Your supplier will explain the terms of its contracts to you in more detail, of course, but you’re likely to come across the following options:
|Ongoing contract||Your agreed energy rates will be locked in for the duration of your contract. You’ll usually be offered a benefit, such as a discount – but this will only last for a particular period, like the first 12 months of your contract, and will then either roll over or come to an end. Meanwhile, the contract itself will go on indefinitely until you (or your supplier) cancel it. Usually, there’ll be an exit fee to pay when you choose to end your contract.|
|Plan with no contract terms||Similarly, this plan will go on indefinitely until you or the supplier ends it, and you won’t have to pay an exit fee for cancelling it. However, your agreed rates won’t be locked in, and may change. Plus, it’s less likely that you’ll be offered any benefits.|
Business energy discounts
When you compare Australian business energy suppliers and their rates, you’ll find that the majority of them offer discounts – at varying degrees of chunkiness – to new customers. Usually, these apply to your usage rates, and they can range from around 5% off to a juicier 30% off. Often, the discount will vary depending on which plan you choose.
The important thing to understand about these discounts is that they don’t tend to be permanent (as we touch on above, in our section about ongoing contracts). Your discount will apply through a predetermined benefit period – say, one year, or 24 months – and after that, you’ll either lose it altogether, or your supplier will roll it over and allow you to keep it for another predetermined stretch of time. Alternatively, your supplier may also put you onto a different discount, which could be better or worse than the one you previously benefited from.
Our advice here is this: feel free to be tempted by a big discount, but make sure that you’re totally clear on – and prepared for – what will happen to it once your benefit period comes to an end. Remember, if you lose the discount and find that you’re now paying too much, you can always take this as your window to switch to a new supplier (we advise shopping around at least every 12 months to make sure you’re getting the best deal). Just be aware that you might have to pay your current supplier an exit fee.
Additional business energy charges
Unfortunately, the cost of business energy isn’t just a question of usage rates and supply charges. Depending on your supplier, you might also have to pay a variety of extra fees on a regular or one-off basis.
Below, we explain the additional charges commonly associated with business energy. Different suppliers charge different combinations of these: some charge a lot, and others charge very few.
- Demand charge: usually only applicable to large businesses, this is an additional fixed cost on top of your supply charge. It’s a charge for the times at which your business’s energy demand is high (for example, if you have lots of appliances in use at once) and so puts extra pressure on the grid. Only businesses with smart meters can be subject to demand charges.
- Move in/new connection fee: a one-off payment you’ll be asked to make when the supplier first connects you to its service. Most suppliers charge $12.55 to Sydney-based businesses, but some charge more, and others don’t charge a new connection fee at all.
- Credit card payment fee: an additional charge on top of every payment you make with a credit card. Usually, it’ll be a small percentage of the total bill you’re paying.
- Payment processing fee: an additional charge on top of every payment you make with a debit card. Again, it’s usually a small percentage of the total bill you’re paying.
- Paper billing fee: a charge for requesting paper bills instead of viewing them online.
- Late payment fee: what you’ll be charged if you don’t pay your bill in full by your due date.
- Disconnection fee: what you’ll be charged if you disconnect from the supplier’s service. This could be because you’ve switched to another supplier, or because the supplier has disconnected you for missing payments. Somewhat cruelly, disconnection charges for those who haven’t paid their bills are usually the most expensive.
- Reconnection fee: a charge for reconnecting to the supplier’s service after a period of disconnection.
- Exit fee: what your supplier might charge you if you opt to switch suppliers early, before your contract period has ended. If you’re looking for flexibility, try to avoid suppliers that charge exit fees.
Environmental schemes for businesses
Energy is obviously a big area of concern when it comes to the environment. In Australia, there are two major schemes that aim to improve and incentivise the cleanliness of the energy that businesses use.
These two schemes also have a bearing on energy costs for businesses, but in two very different ways. Let’s take a closer look at them:
GreenPower is a government scheme that enables businesses (and residential customers) to buy electricity from renewable sources.
Most Australian business energy suppliers offer at least one plan with a GreenPower add-on. Usually, your supplier will offer a few different set percentages – most often ranging from 10% to 100% – and you’ll be able to choose what percentage of your energy comes from government accredited renewable sources.
GreenPower does cost a little extra – usually somewhere between 2 cents and 5 cents per kWh of electricity that you use, on top of the usage charge you’d already be paying. This amount is set by each individual supplier, not the government – so as with anything, you’ll want to shop around for the best rate.
Remember, GreenPower is an investment in renewable energy that can only mean better things for the planet – and there’s also the fact that consumers prefer their businesses to be environmentally-conscious. So don’t dismiss it out of hand because it adds an extra cost to your bill.
The Solar Feed-In Tariff
Now, here’s where you can make some money! If your business has a solar energy system installed, you can sell any unused electricity that you generate back to the power grid, via your energy supplier. What you receive for this is called a solar feed-in tariff (FiT).
Usually, your supplier will offer a set amount per kWh that you don’t use. This will normally appear as credit on your energy bill. The majority of suppliers offer the same amount per kWh on all their plans, but some outdo themselves by offering juicier rates on plans designed specifically for businesses with solar energy systems.
For the most part, though, FiTs tend to range from 5 cents to 12 cents per kWh. Again, it’s a question of shopping around for good rates, which do vary from state to state.
How to save money on energy bills
We understand how important it is for you to keep things lean, and in business, there’s always room for cost cutting! Here are our five top tips for shaving dollars and cents off those energy bills:
1. Find the right supplier
It may sound obvious, but it bears repeating over and over until you’ve made it your mission to seek out the supplier that’ll charge you the best rates. If that sounds a bit time-consuming, don’t worry: you can save yourself hours of research by delegating this mission to a business energy broker.
And the fastest, easiest way to do that? Using our free quote-matching service. Simply answer a handful of questions about your business and its energy use, and our trusted broker will find the cheapest quote for you.
Remember, this isn’t a one-time process. We advise shopping around and being open to switching at least every 12 months. After all, the cheapest supplier this time last year may no longer be the cheapest supplier today.
2. Choose the right tariff
Again, it sounds obvious, but we can’t stress the importance of choosing the right tariff enough, because it will impact how much you spend. If your business operates largely during off peak hours, for example, you could save a lot by plumping for a time-of-use tariff.
Often, a supplier or energy broker will be able to advise on which tariff they think will be the best fit for you.
3. Get energy efficient equipment
Better energy efficiency equals cheaper bills. There are a number of things you can install in order to boost your premises’s energy efficiency, including energy efficient lighting, automated cool room doors, and insulation for any hot or cool pipework.
If you use motors, whether for fans, irrigation, or refrigeration, you should upgrade to energy efficient models. You can also implement head pressure reduction or variable head pressure on your refrigeration system.
4. Install a solar panel system
It goes without saying: you’ll reduce the amount you need to spend on electricity from your supplier if you can generate some of it yourself. It’s also worth noting that you may be eligible for additional credit on your energy bills as a result of the Solar Feed-In Tariff. Why not take full advantage of that famed Aussie sunshine?
5. Install power factor correction
Your business’s power factor is a measure of how efficiently it uses energy. It’s an important consideration for large businesses, because improving your power factor ratio will reduce the demand charges that you have to pay. If you run a small business and don’t pay demand charges, this tip won’t be relevant to you, so go ahead and skip to the next one!
Improving your power factor ratio is simply a case of installing a power factor correction unit. Put very simply, these units generate reactive power for you rather than drawing it from the network. This reduces the demand your business places on the grid, and so in turn reduces your demand charges.
On this page, we’ve covered the specific electricity rates charged by different suppliers, and the average rates in Australia as a whole. We’ve also explored the different kinds of rates and fees that suppliers charge, and explained how different tariffs and contract plans work. Plus, we’ve talked about energy brokers and environmental schemes, and imparted some tips for trimming down your energy bills.
Now that you’ve got a clearer understanding of all that, we hope you’re feeling prepped and ready to dive into your search for the best energy prices and deals you can find. But our contribution to your journey doesn’t have to end here.
Let us help you to zero in on the best energy rates quickly and easily with our free quote-matching service. Simply answer a few questions about your business and its energy needs, and our trusted broker will find the best quote for you. Our service is fast and free, and it saves you finding and connecting with a broker yourself. Oh, and it also saves Expert Market customers an average of $1,837 per year on their energy bills. What’s not to like?
What is a good rate for business electricity?
This is a hard one to answer, because it depends on so many things – including the location of your business and the type of tariff that best suits you. For example, if you’re based in Sydney and looking for a single rate tariff, the cheapest usage rates for electricity will be somewhere around 20 cents to 23 cents per kWh.
Of course, what makes a good rate is subjective. To one business, good may translate as the cheapest available, while to the business next door, good might mean the cheapest available with 100% GreenPower – and to the business across the street, good might mean the rates with the biggest initial discounts.
It’s worth knowing that a business energy broker can help massively here. They tend to have excellent knowledge about the energy market in your local area, and so can advise on what the best rates will look like for you.
Are business electricity rates cheaper than domestic?
Again, it’s difficult to say a definitive yes or no here, because it’ll depend on the rates in your local area. Generally though, rates for larger businesses will be more expensive than those paid by residential customers. This is because big businesses put more demand on the grid and need more infrastructure to keep them supplied, and so their rates will usually be higher to account for that.
How much energy does the average business use?
How much energy your business uses will depend on all sorts of factors, including the size and nature of your business, the equipment your team uses, and the number of sites your company operates across.
In general, though, you can get a broad idea of the kind of energy consumption you might be able to expect from these estimations:
|Business size||Annual energy consumption|
|Small business||Up to 30,000 kWh|
|Small to medium business||30,000 – 150,000 kWh|
|Medium business||150,000 kWh – 1 million kWh|
|Large business||1 million – 7.5 million kWh|
|Extra large business||7.5 million+ kWh|