Electricity News for Perth & WA businesses in the SWIS grid
The electricity year starts on the 1st October of every year. Capacity charges for every contestable business in Perth and WA in the SWIS grid resets on this day. A contestable business in the electricity industry uses more than 50,000 kWh per annum and that equates to a spend of approximately $1200 per month. This article explains how your business can benefit and reduce electricity costs by managing consumption and demand over the summer.
What is a capacity charge?
Modern life relies on a constant supply of electricity, so it’s essential there is enough electricity to meet demand across the entire grid at all times.
Although the demand for electricity constantly fluctuates depending on a wide variety of factors, the system needs to have sufficient capacity to ensure supply during the highest demand periods.
This ‘capacity’ is provided via standby generators and other methods which incur a cost, and this cost is passed on to businesses in the form of a capacity charge. The capacity charge is essentially a penalty to ensure supply of electricity to the entire grid in times of peak demand.
Do all businesses pay a capacity charge?
A capacity charge can be up to 23% of a business’s overall energy bill for the year, but for a lot of businesses, it’s easily avoidable.
A capacity charge is applied based on a business’s energy use during the periods when WA’s energy grid is at maximum demand. This is determined based on a few hours of peak consumption between December and March each year.
If your business contributed to electricity demand during the peak consumption periods, it will be charged a penalty for its part in that demand for electricity.
On the other hand, if your business did not draw electricity from the grid during the calculation periods, you will not have contributed to peak demand, and you can avoid the capacity charge.
How to avoid a capacity charge
Businesses that can reduce electricity consumption for a few hours during peak periods are ideally placed to take steps to avoid the capacity charge and reduce their electricity bill.
Peak periods are in 1 ½ hour windows between December and March (which generally occur during the hottest days of the year). So, if you know when the periods of pressure on the grid are going to be, you can power down non-essential energy usage for that period and reduce or avoid the charge on your next yearly bill.
While business owners may be able to make rough predictions about the periods of peak demand, getting them right is a very complicated process. Factors including cloud cover, sea breeze, humidity, heatwaves, day of the week and electricity consumption across the grid all play a part in determining when those peak periods are going to be. Over time, the peak demand times have shifted with the increased adoption of solar PV, making it even more difficult to predict.
Amanda Energy uses sophisticated analytics to predict and assess the hours that will impact the capacity charge. Every Amanda client receives alerts to advise them to power down their non-essentials, so they’re in the best position to reduce the charges wherever possible.
Shaving just a few hours each year allows you to lower your energy bill over the life cycle of your business. For example, if a business has an average annual energy bill of $50,000, taking steps to avoid the charge could save up to $10,000 or more. For large-use customers, savings could be hundreds of thousands of dollars per year! This money can then be allocated to purchasing essential assets, upgrading or servicing equipment and other important business activities.
Now that Capacity Charges are resetting on the 1st of October 2025, it’s time to plan for reducing your electricity consumption during the summer. Since 2010, Amanda Energy’s peak shaving program (formerly DSM) is informative and effective in reducing energy costs. Find out more by contacting an energy expert today.