Commercial electricity – sustainable energy solutions for businesses

What is commercial electricity?

Commercial electricity refers to the power that small and medium-sized enterprises (SMEs) require for their operations and processes. Unlike household electricity, commercial electricity is often offered in larger quantities and at special tariffs tailored to the needs of organizations.

The most important requirement for signing up for a commercial electricity tariff is that you own a commercial business or are authorized to sign an electricity contract on behalf of your company.

Significance of commercial electricity for businesses

Commercial electricity plays a crucial role for businesses as it ensures a reliable energy supply and offers opportunities to reduce costs and improve their ecological footprint.

‍Cost savings:

One of the biggest advantages of commercial electricity is the potential cost savings. Through special tariffs and contracts, companies can significantly lower their energy costs. In particular, through long-term contracts like Power Purchase Agreements (PPAs), stable and predictable electricity prices can be secured, which increases planning reliability.

‍Eco-friendliness:

Commercial electricity also offers significant environmental benefits. By sourcing electricity from renewable sources such as wind and solar power, companies can substantially reduce their CO₂ footprint. This green electricity / eco-power is good for the environment, improves the company's image, and can thus contribute to a positive public perception.

Regulatory requirements:

Many countries, including Germany, have strict regulatory requirements for companies regarding energy consumption and emissions. Commercial electricity helps companies meet these requirements while achieving their sustainability goals. Sourcing green electricity also allows companies to benefit from support programs and tax incentives.

What is the difference compared to industrial electricity?

The main difference between industrial electricity and commercial electricity lies in the consumption volume and the associated tariffs, as well as the nature of use.

‍Consumption volume: Industrial electricity is designed for heavy consumers with a very high energy demand, typically companies that consume several hundred thousand kilowatt-hours up to several gigawatt-hours annually. Commercial electricity, on the other hand, is aimed at small and medium-sized enterprises with a moderate energy demand.

‍Tariffs: Due to the high consumption, industrial customers can often benefit from cheaper conditions tailored to bulk buyers. These tariffs can include special options for load management and flexible power purchasing, which are often not included in commercial electricity tariffs. However, this is precisely where trawa's advantage lies: we enable commercial customers with a consumption of over 100,000 kWh to purchase electricity at industrial rates.

Procurement strategies for commercial electricity

Whether it's industrial electricity or commercial electricity, there are various procurement strategies for both types of power supply. On our topic page on electricity procurement, we go into detail about the pros and cons of these strategies - here is a brief overview:

Fixed-price procurement:

‍In this type of power procurement, companies sign long-term contracts with suppliers. For this, consumption is forecasted. Companies then pay a fixed price for every kilowatt-hour (kWh), regardless of how and when they use the electricity.

‍Spot market procurement:

Spot market procurement involves trading electricity at current market prices in short-term trading: companies purchase their electricity on the day-ahead market or intraday market, i.e., on a daily basis or in the form of hourly products. 

‍Structured procurement:

With structured procurement, companies develop a customized strategy to optimize their electricity purchasing. This involves analyzing market data, trends, and price forecasts to determine the most favorable purchasing times and markets. Companies can combine different electricity procurement models, for example, futures market or spot market products, to reduce costs and minimize risks.

Market volatility: Challenge and solution

In 2022 and 2023, the Ukraine conflict in particular – and the associated increased energy procurement costs - influenced developments in the German energy markets and the overall economic situation in Germany. Fluctuating electricity prices can make planning and budgeting difficult.

Here, long-term contracts like PPAs offer a solution, as they guarantee stable prices over a longer period. This is exactly where we at trawa step in: we work with our clients to develop a procurement strategy to find precisely the right balance of security and price stability.

The trawa Green Electricity Solution

At trawa, we offer commercial customers such a cost-effective green electricity solution. With our solution, savings potentials of up to 30 percent can be realized through optimized power procurement and flexible usage.

To achieve this, we use state-of-the-art technology and combine the flexibility of exchange trading with long-term power purchase agreements. We sign such Power Purchase Agreements (PPAs) with operators of wind and solar parks. With the help of artificial intelligence and cloud solutions, we align and optimize your electricity purchasing and energy management.

Every company, regardless of size, gets access to cheap green electricity tariffs through our trawa green electricity solution and can benefit from it. At the same time, our energy management solution supports you in resource-saving energy consumption.

In this way, we enable our commercial customers to transition to sustainable and cost-effective energy production and use.

FAQ on commercial electricity

Have we not yet been able to answer all your questions about commercial electricity? Then feel free to take a look at our FAQs on the topic.
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What is the difference between commercial electricity and private electricity?

‍Commercial electricity differs from private electricity in several aspects:

Tariffs and prices: Commercial electricity tariffs are often cheaper than private rates, as they are geared toward the higher consumption and specific requirements of companies. In addition, there are often special conditions and discounts for commercial customers.

- Contract terms: Commercial electricity contracts are often more flexible and can be better tailored to a company's needs, for instance through customized contract durations and special pricing models.

- Consumption profile: Commercial electricity customers often have a different consumption profile compared to private customers, which is factored into the pricing. For example, companies can benefit from cheaper night-time rates if they primarily produce during the night.
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Is commercial electricity cheaper than private electricity?

‍Yes, commercial electricity is generally cheaper than private electricity. This is due to several factors:

- Larger purchase quantities: Companies usually purchase larger portions of electricity, which leads to better terms.

- Special tariffs: There are unique tariffs and discounts for commercial customers that are not available to private consumers.

- Negotiation power: Commercial electricity customers often have more leverage to negotiate individual contracts that better fit their consumption profile and are therefore cheaper.
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How is individual commercial
electricity consumption determined?

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‍The individual consumption of commercial electricity is determined by a detailed analysis of the load profile. This includes:

‍Collection of historical electricity consumption: Analyzing consumption data over a certain period of time helps identify patterns and peak periods.

‍Use of load management software: Modern software solutions monitor real-time consumption and allow for a precise allocation of the energy amounts used at specific times and processes.

‍Consideration of production cycles and operational processes: Consumption is also influenced by the specific production cycles and operating hours of machines and systems. A precise record of this data helps determine the power demand accurately. Through these methods, energy consumption can be optimized and power procurement adjusted accordingly to reduce costs and increase efficiency.
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From which sources does the energy for
commercial eco-power / green electricity come?

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‍The energy for commercial green electricity tariffs comes from various renewable sources. These include:
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• Wind power: Electricity from wind farms operated both onshore and offshore.

• Solar energy: Electricity from photovoltaic installations mounted on roofs or in solar parks.
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• Hydropower: Electricity from hydroelectric power plants that harness the energy of flowing water.
  
  

• Biomass: Electricity from biomass plants that use organic materials such as wood or agricultural waste. Using these renewable energy sources helps reduce CO₂ emissions and ensures a more sustainable energy supply. ‍

How is the price of commercial electricity calculated?

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‍The price for commercial electricity is made up of various components:

• Energy price: This price is negotiated on the electricity market and depends on supply and demand.
  
  

• Grid fees: These charges are levied for using the electricity grid and vary by region.
  
  

• Levies and surcharges: This includes, for example, the EEG surcharge to promote renewable energies, the KWKG surcharge to promote combined heat and power, as well as other legally defined charges.
  
  

• Taxes: Various taxes are levied on the price of commercial electricity, including electricity tax and value-added tax.
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How much tax is paid on commercial electricity?

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‍The following taxes are levied on commercial electricity:

• Electricity tax: This is currently 2.05 cents per kilowatt-hour.

• Value-added tax (VAT): This is charged on the total electricity price dynamic including all other costs and levies, and is currently 19% in Germany. The approved Budget Financing Act includes, among other things, the reduction of the electricity tax for companies classified as "manufacturing sector and processing industry enterprises" (UdPG) to the European minimum tax rate of 0.50 euros/MWh.