Understanding commercial electricity bills is crucial for assessing the financial viability of going solar. These bills consist of various charges, including energy, network, environmental, and others.
Energy charges are based on electricity consumption at different times, while network charges cover operating costs and demand charges for peak consumption. Solar-only systems may reduce peak demand charges, but it's not guaranteed.
Breaking down the bill into sections like billing period, metres, usage summary, supply and distribution charges, metering charge, environmental fees, feed-in tariff for solar, and taxes is essential for clarity. Commercial solar systems might require export limitations due to grid capacity constraints, but optimising the system can still lead to valuable solar energy self-use.
Consulting an Independent Solar Consultant or solar engineer can help navigate complexities and ensure accurate financial modelling. If questions arise, contacting the local energy supplier is recommended.
Energy network fees and other charges
Electricity bills for large market customers are often complex and challenging to understand. However, for a proper financial assessment, the Independent Consultant must consider this data in the economic model if you seek to go solar.
The various charges are categorised into energy, network, environmental and other. Energy charges relate mainly to the cost of supplied electricity and are charged per energy unit used (kilowatt hours, kWh) at different times of the day. Electricity consumption during peak, shoulder and off-peak periods is charged at different rates.
Network charges are often a substantial part of commercial customers’ bills. Network charges relate to the cost of operation of the electricity network and are partly also charged per energy unit (kWh) used at different times of the day.
Depending on your distribution network service provider (DNSP), various capacity charges are imposed. They are called demand charges and relate to your maximum energy demand, the peak consumption, during a defined period and vary by region.
In other words, you are charged for the maximum amount the network needs to provide for you. A single sizeable maximum demand occurring once a month can define your capacity charge for the month or even an entire year, depending on the applicable definition in your region.
A solar-only system could reduce the peak demand charge, but it is not guaranteed. The most likely scenario is a partial reduction depending on the DNSP and region. If your solar company needs to explain it – be cautious.
What steps do you take to understand all the charges?
While commercial electricity bills can make one’s head spin, and so many people put it in the too-hard basket – we say treat it like a big banquet to eat – which is – cut into bite-sized pieces, that way, you can avoid paying too much.
A) Look at the billing period to understand how many days you pay electricity.
B) Check how many meters are quoted in the bills and make sure the reference number on the meter matches your meter number in the electricity box
C) Confirm the start and end date of the billing period
D) If there is a usage summary – please note this is simply the total kWh consumed and the cost per kWh. Sometimes this section also shows graphs to compare your consumption with similar enterprises or past consumptions, e.g. one year before.
E) Your bill will feature a supply charge. This is the cost the electricity retailer charges you each day for the supply of electricity. In business bills, the supply charge can also include a variable amount linked to your overconsumption for that period.
What is a business distribution charge?
F) Energy retailers also charge the business a distribution charge. This is like a petrol/road tax, meaning these funds will be used to maintain the electricity poles and wires infrastructure.
G) Some companies charge a metering charge, which is the cost of maintaining and reading the electricity meter.
H) If you have decided to have “green” electricity supplied or the energy retailer or government have levied an environmental tax, these costs are registered in a section entitled- environmental charges. Note: not all bills will have this charge.
I) If you have a solar system and your energy retailer pays a feed-in tariff, you should also see a credit on the commercial businesses’ electricity bill.
J) Taxes such as the GST are the final category to understand when reading your commercial electricity bill.
Is there a feed-in tariff for commercial solar?
For larger solar systems, your electricity retailer might offer little feed-in tariff to purchase exported excess electricity from you. Alternatively, they may provide none and limit the export opportunity for large systems.
It is essential to understand this and consider it in the financial modelling to size a solar system to achieve a minimum amount of solar export. However, a financially optimised solar system might be sized to export electricity at certain times, even with a zero feed-in tariff.
Commercial solar systems will require export limitations in some areas – as the grid can not handle the export, especially in summer. This means valuable renewable energy is wasted because the energy companies and politicians in the past responsible for maintaining the grid infrastructure have been sitting asleep at the wheel.
It may, for example, export energy in summer to have sufficient solar energy for self-use in winter. An Independent Solar Consultant or solar engineer can help you navigate this challenge.
Commercial electricity bills can be complicated, but understanding your electricity bill’s various categories is essential to ensure you are not overcharged. If you have any questions about your bill, we always recommend calling the local energy supplier for their assistance.