Energy – KWh explained

Researching and comparing gas and electricity tariffs from different energy suppliers is the easiest way to get the best energy deal.

But understanding kWh, how many you use a year, and how energy suppliers use them to calculate your energy bills will help you get a better deal too. You’ll find your kWh use on your latest energy bill. 

What is a kilowatt hour?

A kilowatt hour (kWh) is a unit used to measure energy usage. Energy suppliers use them to work out how much your bills should be. One kWh equals a thousand watts of energy used in an hour.

Every appliance uses a different amount of energy. And a kWh is just a measurement of how much energy an appliance uses in an hour. 

So, a 1,000-watt tumble-dryer needs 1000 watts (1 kW) of power to make it work. That means it uses 1kW of energy in an hour (1kWh).

Over a day you’ll be using watts of energy on all of the appliances you run, your heating and lights. If it’s on, it’s using energy. That’s why leaving appliances on standby still creates a kWh cost on your energy bill, because they’re still using energy.

What can you use a kWh for?

While all appliances are different, for 1 kWh, you could:

• Boil a kettle 10 times
• Do the ironing for an hour
• Run a fridge-freezer for three hours
• Watch seven hours of television

Knowing which appliances use the most watts of energy can help you plan better and  reduce your energy bills.

What affects the price per kWh?

Energy providers measure how many kWh you’re using when calculating your bill. They then multiply this figure by the price per kWh (or unit cost) agreed in your gas or electricity tariff (which could be fixed or variable).

The unit cost is affected by different factors. These include things like household energy consumption and unit costs in different regions. 

Depending on the supplier, households that have a low energy consumption can pay more per unit than households that have a high energy consumption. While the pattern of when you use energy can also have an impact on how much your energy costs. Using energy at off-peak times will cost you less.

Unit costs also vary depending on whether you pay by credit, direct debit or prepayment.

According to the Department for Business, Energy & Industrial Strategy (BEIS) the average cost for standard electricity in the UK in 2022 was 28p/kWh. But there was considerable variation in the regions, with Merseyside and North Wales paying 30p/kWh and Yorkshire paying 27p/kWh for their electricity.

However, unit cost isn’t the only charge on your bill. There’ll be a standing charge to cover national grid maintenance and keeping your home connected to the energy network too. Standing charges are exactly that. It’s a set price you pay per day, and it has nothing to do with the amount of energy you use. 

Natural disasters and wars also affect unit costs as they drive up the wholesale cost of energy. If you’re on a fixed rate deal, you wouldn’t notice it until the end of your deal though.

How can you make your energy bills cheaper?

According to Ofgem, the cheapest available dual fuel tariff in March 2023 would cost the average domestic user £2,375. a year. But how much your energy bills cost depends on the amount you use and the price your provider charges. There are always ways you can cut your energy bills: 

1. Switch off

Turn lights off and unplug appliances and chargers when they're not needed.

2. Keep the draughts out

Use draught excluders and thicker curtains to keep your home warm and cosy.

3. Set your heating for the right time

Don't leave the radiators on while no one's home. Drop the temperature by 1°C to save as much as £60 per year.

4. Wash cooler

Wash your clothes at lower temperatures. Your washing machine uses around 90% of its energy just heating water.

5. Get rid of old appliances

Newer appliances generally have better energy ratings.

6. Choose your bulbs

Use energy efficient lightbulbs around the home - replace Halogen bulbs with LEDs, they use 85% less electricity and last longer.

7. Measure smart

Use a smart meter to keep an eye on how much energy you're using.

8. Read your bills

If you spot an issue, let your provider know asap.

9. Invest in double glazing

Double glazing insulates your home and helps reduce your heating bills.

10. Shop around

Always see if you can get a better price by comparing energy prices and suppliers.

Switch energy suppliers

It’s worth finding out what the average unit cost is in your area. If you’re paying above average it could be time to switch energy suppliers.

This is where it pays to know your kWh usage per year. You’ll find it on your latest energy bill. You’ll be asked for it when you compare or get a quote from a new supplier. It gives you a much better idea of how much it’ll cost with the new supplier, because your quote will be more accurate.

The BEIS publishes data each year. You can find unit costs broken down by region, average gas and electricity bills, along with statistics on household expenditure on fuel.

Energy providers add new tariffs regularly. So when your current deal runs out, make sure you get online and compare.

You can get separate deals for gas and electricity, or you can opt for a dual fuel plan that covers both. There are plenty of tariffs to choose from. 

Recently, a number of smaller energy suppliers have entered the UK market, including some green energy suppliers. They often offer tariffs that are cheaper than those of the ‘big 6’ suppliers. Be careful though, if they’re new and less established they don’t always have customer services teams as readily available as the larger counterparts. Plus, there’s always the risk a particularly small or new supplier could go out of business and leave you without an energy supplier.