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Business Energy Glossary

What is a kWh?

The kWh turns up on every UK business and domestic energy bill, without exception. Short for kilowatt-hour, it is what suppliers price (in pence per kWh) and what your meter eventually reports — directly for electricity, after a short conversion chain for gas. If you only learn one energy unit, learn this one. Almost every cost calculation on your bill flows from kWh × the rate.

The kWh is the universal billing unit across business electricity and business gas contracts in the UK. It’s how every kilowatt-hour of supply gets priced and metered.

kWh appears alongside a unit rate (p/kWh) on every bill. Multiply the two and you have the variable element of the cost. This entry covers what a kWh actually is, how it differs from kW, how electricity and gas bills convert raw meter readings to kWh, and the practical scenarios where the unit catches people out. For the specific gas conversion chain, see how gas is converted to kWh.

What a kWh actually is

A kilowatt-hour is one kilowatt of power sustained for one hour. The maths is straightforward:

1 kWh = 1 kW × 1 hour = 3,600,000 joules

Run a 1 kW fan heater for one hour and it uses 1 kWh. Run a 2 kW kettle for thirty minutes and it uses 1 kWh. Run a 100 W light bulb for ten hours and it uses 1 kWh. The unit packs together two things — how powerful the equipment is, and how long it runs — into one tidy figure.

Energy bills are about how much energy you used, so kWh is the unit suppliers price. The unit rate on the bill is the price per kWh, in pence.

kW vs kWh: power vs energy

The pair that trips everyone up at least once:

• kW (kilowatt). Power. The rate at which energy is being used right now. A 100 kW boiler is consuming gas at the rate of 100 kW. Snapshot in time.
• kWh (kilowatt-hour). Energy. Power multiplied by time. The same 100 kW boiler running for one hour has used 100 kWh.

A useful analogy: kW is like miles per hour, kWh is like miles travelled. You can drive at 70 mph (the rate) for an hour and cover 70 miles (the total). Equally, you can drive at 35 mph for two hours and cover the same 70 miles. The total energy is the same; the rate and the duration are different.

This is why peak loads (high kW) and total consumption (kWh) are two different cost levers. Two sites with the same annual kWh can have very different kW peaks, and that affects capacity charges and triad exposure quite separately from the kWh element.

How electricity gets to kWh

Electricity meters record kWh directly. The meter reading is in kWh and the bill calculation is:

kWh used = closing reading − opening reading

For smart meters and half-hourly meters, the readings are taken automatically (every half-hour for HH, daily for smart). For traditional meters, the supplier estimates between reads. Estimates can drift, which is why providing a manual reading once a month keeps the bill accurate.

Time-of-use tariffs add a wrinkle: the meter records kWh in multiple registers (day rate, night rate, sometimes weekend rate) and each register is priced separately. The total kWh is still the sum; the price varies by register.

How gas gets to kWh

Gas meters record volume — cubic metres (m³) on modern meters or hundreds of cubic feet (100 ft³) on older imperial meters. The conversion to kWh applies two factors:

kWh = m³ × volume correction × calorific value ÷ 3.6

• Volume correction (default 1.02264). Adjusts for the temperature and pressure at the meter compared to standard reference conditions.
• Calorific value (around 39.5 MJ/m³). The energy content of the specific gas being delivered, varying by source and time of year.
• Divide by 3.6. Converts megajoules to kilowatt-hours.

A reading of 100 m³ at typical values produces around 1,121 kWh. The conversion chain is shown on the bill, which is worth knowing if you ever want to verify the figures. For the full chain explained, see how gas is converted to kWh and what calorific value is.

Everyday kWh examples

To anchor the unit in something tangible:

Where kWh appears on bills

On a UK business energy bill you will see kWh in several places:

• Meter reading section. Opening and closing reads, difference in kWh.
• Unit rate line. Price per kWh in pence, multiplied by the kWh used to get the variable cost.
• Standing charge. Fixed daily charge, separate from kWh (does not depend on consumption).
• Pass-through levies. Climate Change Levy and various policy costs shown as p/kWh.
• VAT. Calculated on the totals; depends on the type of supply (5 per cent for de minimis or qualifying use, 20 per cent otherwise).

Multiply the kWh used by the unit rate and you have the energy cost. Add the standing charge for the period, the levies, the VAT, and you have the full bill. The arithmetic is mechanical; the rates are where contract terms matter.

Comparing prices in p/kWh

When comparing energy contracts the headline number is the unit rate in p/kWh:

• UK business electricity unit rates currently sit in the range of about 22 to 35 p/kWh on most contracts (varies materially by contract date, term and supplier mix).
• UK business gas unit rates typically run 5 to 12 p/kWh.
• Standing charges add a fixed daily cost that is independent of consumption. Two contracts with similar unit rates can have very different total costs if standing charges differ.

For an accurate comparison, run both contracts through your typical annual consumption to produce a total-cost figure rather than just comparing unit rates.

Common pitfalls and confusions

• kW vs kWh. The single biggest confusion. kW is power (the rate); kWh is energy (the total). The bill uses both for different things.
• Watt-hours vs kilowatt-hours. 1 kWh = 1,000 Wh. Smaller equipment specifications often quote Wh; bills always quote kWh.
• MWh on large bills. Some industrial bills use MWh (megawatt-hours) — 1 MWh = 1,000 kWh. Confusion between the two on different bills is common when reviewing portfolios.
• Gas billed in “units”. Some older bills show gas in m³ or 100 ft³ rather than kWh. The conversion is on the bill but easy to miss.
• Therms. An old unit still used on some wholesale gas pricing references. 1 therm ≈ 29.31 kWh. Retail bills are in kWh; wholesale is sometimes in therms.
• kWh vs kWp for solar. kWp is the peak rated capacity of solar panels. A 50 kWp system might produce 40,000–45,000 kWh per year of energy. Different concept, same root unit.

For the combined volume-to-energy conversion used on UK gas bills, see the gas conversion factor.

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