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How to manage energy for businesses? (And avoid paying high energy tariffs).

10 Mar 2025

Marcelo Salgado

If your business has recently jumped aboard the electric vehicle uptake revolution and deployed an EV fleet, you’ll know managing energy consumption becomes critical - not just for sustainability but also for cost management.

Long gone are the days of managed fuel cards, if your business consumes more than 100MWh of electricity annually, you may be classified as a large business under energy tariffs. This classification comes with significant implications, particularly the move to kVA (Kilo-volt-amperes) tariffs, which require careful energy management to avoid skyrocketing costs.

What Are kVA and kVA Tariffs? (And why do they matter?)

KvA or Kilo-volt-amperes, is a measure of apparent power within a system, for example in a 100% efficient system the kW would be equal to the kVA. The reality is that not all systems are built the same however and are not all 100% efficient. Solar Quotes actually uses a great analogy with a pint of beer to demonstrate this.

Under Ergon Energy’s pricing structure (for example), businesses with large electricity consumption are required to switch to kVA-based tariffs. Unlike traditional small business kW tariffs that measure active power and are usually a flat kW rate, kVA tariffs account for both active (usable) power and reactive (wasted) power. This encourages businesses to operate more efficiently and reduce strain on the electricity network. It also means that it penalises business that don’t.

A key factor influencing kVA tariffs is power factor, a measure of equipment. Equipment with a higher power factor uses electricity more efficiently, resulting in lower costs under kVA tariffs. Conversely, businesses with lower power factors may face higher bills due to inefficiencies in their electrical systems.

What is the impact on EV Fleets on a kVA Tariff?

Adding a fleet of EV chargers to your operations can significantly increase electricity consumption, which could potentially push your business above demand thresholds. Without proactive energy management in place, this can lead to costly electricity bills.

For example at EVOS, we faced an interesting challenge with our office's energy consumption. Our baseline usage hovered around 70MWh annually, but the addition of eight new electric vehicles (EVs) was set to push us well beyond the 100MWh threshold.

Unmanaged demand under kVA tariffs can result in businesses paying thousands of dollars more annually for electricity.

For example, under Ergon’s Tariff 44, customers are charged a demand charge kVA of $27.48790 per kVA and Demand charge kW $30.544 per kW, in addition to usage charges per kWh.

To illustrate, if five EVs are all charging in a 30min window and each vehicle charges at 11kW (Tesla), the demand charge alone could cost your business an additional $6,300 per month. However, by managing the EV load and reducing its demand just by 20%, the cost could be reduced to $4,700—a savings of $1,500 per month or $18,100 per year.

Proactively managing your EV charging demand can not only prevent excessive costs but also optimise your energy usage, making it a crucial strategy for businesses operating EV fleets.

How is demand charge calculated?

The peak amount of power drawn from the grid at any time (also referred to as peak demand) is what forms the basis of a demand charge tariff. And it can have a hefty effect on your power bill, depending on the tariff rate and how much power you’re using. So, bearing that in mind, how is it calculated?

The billable demand is recorded at your electricity meter as the average demand over a 30-minute period. They record the energy consumed in those 30 minutes (in kWh) then x 2 to get the average hourly demand. This means you won’t be charged for the highest spike of demand when eg. You turn on your device.

Ergon Energy provides the following example,

“Consider a business that uses 100kWh of electricity for 15 minutes when machinery is starting up then 50kWh for the rest of the 30-minute period. This factory uses 150kWh in this 30-minute period. Therefore, the demand for this period is 150kWh x 2 = 300kW.

The amount of billable demand under some tariffs is calculated using an ‘any-time’ demand approach, meaning your chargeable maximum demand is the highest 30-minute demand period, regardless of when that occurs during the month. Other demand tariffs have a pricing structure that applies charges based on when your maximum demand occurs, giving you an incentive to shift electricity consumption from peak to off-peak charging periods, to save on electricity running costs.”

How can you avoid large business energy tariffs unnecessarily?

Integrating a fleet of EV chargers into your operations can greatly impact your electricity usage, potentially exceeding your business's demand thresholds. By being proactive and implementing smart energy management through your EV charging software for example, you can mitigate paying these unnecessary energy tariffs.

Our EVOS’ Energy Platform is designed for just that. It has features like Demand Tariff Management and Load Management – where you can efficiently monitor and control the load of your available power capacity across your charging stations in real-time helping you save money. Another is Peak Load Forecasting, which runs smart analytics on historical charging data from your site to predict peak loads and create an optimised charging schedule.