The Hidden Drivers of Business Energy Costs

Updated: February 17, 2026

kVA & TCR Banding- The Hidden Drivers of Business Energy Costs

For many businesses, energy procurement focuses on one thing… the unit rate.

But in 2026 and beyond, some of the biggest cost drivers on electricity bills won’t come from how much energy you use, they’ll come from how your site is classified.

Two of the most overlooked factors are kVA capacity and TCR banding.

Understanding both is essential if you want to control rising non-energy charges.

 

What Is kVA Capacity?

kVA (kilovolt-ampere) capacity is the maximum amount of electricity your site is allowed to draw from the grid at any one time.

Think of it as your electrical allowance.

If your contracted capacity is set too high, you may be paying for access to power you never use. If it’s set too low, you risk excess capacity charges or operational issues.

Many businesses have not reviewed their capacity in years. Operations change, equipment becomes more efficient, sites downsize, yet the agreed capacity often stays the same.

As network charges increase, excess capacity becomes more expensive to carry.

 

What Is TCR Banding?

TCR (Targeted Charging Review) banding was introduced to change how certain network charges are recovered.

Instead of charging purely based on usage, businesses are placed into bands based largely on their agreed capacity.

The higher your capacity band, the higher your fixed network charges.

This means two businesses with similar electricity usage can pay significantly different network costs simply because they sit in different capacity bands.

In some cases, businesses are sitting in higher bands than necessary due to historic capacity agreements.

 

 

Why This Matters More in 2026

Network and infrastructure costs are rising. As a result:

  • Fixed charges are forming a larger proportion of total bills
  • Capacity-related costs are becoming more visible
  • Incorrect banding is becoming more expensive

Reducing consumption alone will not always reduce these charges.

That’s why contract structure and capacity reviews are now as important as negotiating price.

 

Common Risk Indicators

You may want to review your kVA and TCR position if:

  • Your capacity hasn’t been reviewed in several years
  • Your business operations have changed
  • You have reduced energy usage but bills remain high
  • You don’t have visibility of your maximum demand data

Many businesses are unknowingly overexposed simply because no one has reassessed their position.

 

The Commercial Reality

Two businesses with identical usage can have very different electricity bills.

The difference is often not price per unit, it’s structure, capacity and classification.

As non-energy charges continue to rise, reviewing kVA capacity and TCR banding is no longer optional for cost-conscious businesses. It’s a necessary part of strategic energy management.

 

How GEAB Supports Businesses

At The Green Energy Advice Bureau, we help businesses:

  • Review contracted capacity levels
  • Assess TCR banding exposure
  • Analyse maximum demand data
  • Identify opportunities to reduce unnecessary network costs

Our role is to provide clarity, not complexity  helping businesses understand where costs sit and how to manage them effectively.

If you would like a no-obligation review of your current capacity and banding position, speak to the GEAB team.