kVA: The Hidden Energy Cost Many UK Businesses Overlook
By Switch365 - (+020250-02-21)
Most businesses keep a close eye on their energy usage. But we often find costs are still rising, even when usage hasn’t increased and in some cases has actually fallen.
In around 1 in 2 business energy reviews, the issue is not overuse. It is something far less visible.
That disconnect is rarely caused by how much electricity a business consumes. More often, it comes down to how energy is drawn from the grid, how efficiently it is used and how much capacity the network must reserve to supply the site. When those factors are overlooked, unnecessary cost can quietly build into an energy bill without anyone noticing.
One of the most common contributors is kVA.
What kVA Means in Practical Terms
kVA, or kilovolt-amperes, describes the total electrical demand a business places on the grid at any given moment.
Where kWh measures energy used over time and kW reflects the power doing useful work, kVA is about capacity. It captures the full load the electricity network must be able to support, including inefficiencies within a site’s electrical system.
From the grid’s perspective, kVA is critical. It determines how much infrastructure is required to supply a premises safely and reliably. From a business perspective, it directly influences network charges, exposure to additional fees and how energy costs behave beyond headline unit rates.
This is why two businesses with similar usage can see very different overall energy costs.
Why kVA Has a Direct Impact on Energy Costs
Every business site has an agreed level of electrical capacity set with the local network operator. This is known as Agreed Supply Capacity and is measured in kVA.
That capacity is charged for continuously, whether it is fully used or not. If the agreed level is higher than necessary, the business pays for unused headroom. If actual demand exceeds it, additional charges can apply.
These costs typically sit outside the unit rate and are often bundled into standing charges or network fees. As a result, they are frequently missed during contract reviews that focus primarily on price per kWh.
Over time, this can leave businesses paying for capacity they no longer need or exposed to charges they do not realise they are at risk of triggering.
The Role of Power Factor
Power factor plays a significant role in how kVA behaves, yet it is one of the least understood elements of business energy costs.
In simple terms, power factor measures how efficiently electricity is converted into useful work. When power factor is poor, a site draws more capacity from the grid to achieve the same outcome.
As power factor falls, kVA rises, even if overall energy usage has not changed. This can increase capacity charges and, in some cases, lead to additional reactive power charges applied by the network.
For many businesses, power factor is never actively monitored. It only becomes visible once it starts affecting costs, often without any obvious change in day-to-day operations.
How kVA-Related Costs Appear on Energy Bills
kVA rarely appears clearly labelled on an energy bill.
Instead, it influences charges listed as capacity or availability fees, maximum demand charges, excess capacity charges and reactive power charges. Because these sit outside unit rates, reducing kWh alone does not always reduce total cost.
This is often why energy-saving initiatives do not always deliver the financial impact businesses expect. Consumption may fall, but structural charges remain unchanged.
When kVA Issues Typically Arise
kVA-related costs tend to emerge gradually as a business evolves, rather than during periods of steady operation.
Growth, new equipment, extended operating hours, the introduction of EV charging or even downsizing can all change how energy is drawn from the grid. In many cases, contracts and capacity settings remain unchanged while the business itself moves on.
Without review, this misalignment can persist quietly for years.
Can kVA-Related Costs Be Improved?
In many cases, yes.
Capacity can often be reviewed, inefficiencies identified and risk reduced. This does not require changes to how a business operates day to day. It starts with understanding whether current settings still reflect how the site actually uses energy.
The key is looking beyond unit rates and checking that the underlying structure is still right.
How Switch365 Approaches kVA
At Switch365, we work with businesses where energy costs are influenced by more than just price.
Our approach focuses on understanding how energy is actually used across a site or portfolio. By analysing half-hourly data, capacity settings and contract structure, we help identify where unnecessary cost or exposure may exist.
This allows issues around kVA, power factor and capacity to be addressed early, before they turn into avoidable cost or operational risk.
Watch: Andy Explains kVA and What You Can Do
To explain this more clearly, our Managing Director, Andy, has recorded a short video outlining what kVA means for UK businesses and why it is worth checking.
This forms part of our Triage energy review, which looks beyond unit rates to highlight potential risks, inefficiencies and structural issues around capacity, power factor and contract setup.
For businesses that have never reviewed kVA before, it is a sensible, low-commitment starting point.
A More Strategic View of Energy
kVA is not something businesses need to master. But it is something they should be aware of.
When energy is treated purely as a pricing exercise, structural issues are easily missed. When it is approached strategically, those issues become opportunities to reduce cost, risk and complexity.
Understanding kVA is part of making energy work around the business, rather than the other way around.
