Explainer
What Is Load Factor? A Simple Guide for Business Energy Users
What it means on your quote, how to calculate it, and how to push it higher to win cheaper rates.
Part of our business electricity guides
Load factor is the single number that tells your supplier how steady your electricity consumption is across the year. It’s the ratio of your average demand to your peak demand, expressed as a percentage. A business that uses electricity evenly through the day, week and year has a high load factor. A business with spiky demand — long evenings off, weekends quiet, big lunchtime peaks — has a low one.
Suppliers care about load factor because steady demand is cheap to supply. Wholesale buyers can hedge it efficiently, and the network operator’s job is easier. Spiky demand is the opposite — it forces the supplier to buy expensive top-up power at peak times. So when you see two businesses with identical annual consumption getting very different quotes, load factor is usually the reason.
A load factor above 60% is excellent. 40–60% is normal for most SMEs. Below 30% is poor and usually adds 1–3p per kWh to your unit rate compared to a flatter equivalent. Improving load factor isn’t always possible (a school is always going to close at 4pm) but where it is, the savings come straight out of your supply cost.
What load factor actually measures
Load factor is defined as your average demand divided by your maximum demand over the same period — usually a year. Both numbers come from your half-hourly meter data, or from kWh consumption plus the metered maximum demand on your bills.
The formula:
Load factor (%) = (Annual kWh ÷ (Maximum Demand kW × 8,760 hours)) × 100
If you used 500,000 kWh last year and your peak demand hit 200 kW, your load factor is 500,000 ÷ (200 × 8,760) = 28.5%. That tells the supplier you only used about a quarter of what you could have used if you’d run flat-out the whole year.
Why suppliers care
Wholesale electricity prices move every half hour. Suppliers buy power in advance on the wholesale market, matching forecast demand to forward contracts. Flat, predictable demand can be locked in at a stable price. Spiky demand forces them to buy expensive peak-time top-ups, often at 2–4× the daytime base price.
When they quote you, they don’t quote a single average price — they build the quote from forecast costs in each settlement period. The flatter your shape, the more of your consumption falls in cheap periods. The spikier it is, the more falls in expensive ones.
Typical load factors by business type
| Business type | Typical load factor | Why |
|---|---|---|
| 24/7 manufacturing / data centre | 70–90% | Demand stays close to peak day and night |
| Cold storage / refrigerated warehouse | 55–75% | Always-on compressors |
| Hotel / care home | 40–55% | Lower demand overnight but never zero |
| Office (9–5, 5 days) | 25–35% | Empty for 16 hours/day and 2 days/week |
| School / college | 15–25% | Closed evenings, weekends, school holidays |
| Retail / hospitality | 25–40% | Variable opening hours, evening peaks |
How load factor changes your quote
Same annual consumption, different load factors, different unit rate. Indicative figures only — actual numbers depend on the wholesale market, your supplier’s margin, and the rest of the contract terms.
| Annual kWh | Load factor 25% | Load factor 45% | Load factor 70% |
|---|---|---|---|
| 200,000 | ~28p/kWh | ~26p/kWh | ~24p/kWh |
| 500,000 | ~27p/kWh | ~25p/kWh | ~23p/kWh |
| 1,000,000 | ~26p/kWh | ~24p/kWh | ~22p/kWh |
Indicative ranges only. Actual quotes vary by region, contract length, time of purchase, and supplier appetite.
How to push your load factor higher
You can’t change what your business does, but you can often spread the load:
- Shift discretionary loads off peak. Charge electric forklifts and EVs overnight instead of mid-afternoon. Run dishwashers in hospitality after the dinner rush, not during it.
- Pre-cool or pre-heat outside peak windows. Bring a building down to temperature before 4–7pm rather than during it.
- Sequence high-load machinery. If two pieces of kit don’t need to run simultaneously, stagger them.
- Add storage. Battery storage (or thermal storage like ice banks) lets you charge cheap and discharge during peak, smoothing your shape on paper even if the underlying demand pattern doesn’t change.
The point isn’t to use less energy — it’s to use the same amount more evenly. Even a 5–10 percentage point gain in load factor can shave 0.5–1p per kWh off your contract, which on 500,000 kWh is £2,500–5,000 a year.
Where to find your load factor
Three places:
- On your renewal quote. Most suppliers print the assumed load factor on the quote itself, sometimes labelled as “LF” or “Load Factor %”.
- From HH meter data. If you have a half-hourly meter, you (or your MOP) can pull a year of half-hourly consumption and calculate it directly.
- From a broker. When we quote a contract for an existing site, we calculate the load factor as part of the standard analysis and flag if it’s low enough to be worth addressing.
Working with Clearsight
We analyse load factor on every HH-metered renewal and flag where load-shifting could materially change the contract price. No upfront fees — we’re paid by the supplier you contract with.
Get a no-obligation business electricity quote in 60 seconds.
Related guides: Half-hourly electricity meters, kVA explained, What is maximum demand?, Business electricity pillar.