Reduction of corporate electric power costs by changing to medium voltage use

 

Controlling and optimising electric power costs

Several years have passed since the liberalisation of the electric power market. Many corporate large consumers have introduced the practice of tendering electric power traders annually, thus trying – in the best case – to reduce or, at least, keep under control electric power costs.
One of the results of market liberalisation is the fact that the elements of the costs paid for electric power are clearly separated. The following cost elements are separately handled:
  • the Electric Power Fee (which is paid to the trader) and
  • the System Usage Fee (which is paid to the network operator)
You must also be well aware of your company’s electric power invoice and know that the actual amount of the System Usage Fee depends secondarily on the committed performance (kW) but primarily on actual electric power consumption (kWh). (System Usage fees are fixed in a ministerial decree and are defined by the Government at the end of December in each year.)

If your company is currently using power at low voltage, it is worthwhile to investigate whether it is the optimal solution or changing to medium voltage use would make your operation more economical!

For whom does it make sense to change to medium voltage power use?

Transition to medium voltage use always requires some investment. A transformer station of your own has to be installed, it must be planned in advance and the required negotiations must be held with the power supplier and different authorities. After installation, the station has to be operated and maintained.
All these require expertise – but the good news is that you do not have to have or acquire this expertise in your organisation. Preparation, installation, operation and maintenance can be done through a service provider experienced in this field. The key questions for the investor-owner are the balance of the investment and the savings on the System Usage Fee after transition, i.e. the return of the investment, and the continuous cost saving that can be achieved after the breakeven point.
A return period shorter than 3 years is considered good – so let us use this as a starting point! Each case is different but, as a rule of thumb, it is worthwhile to consider this less-than-3-year investment for consumers who:
  • have a committed electric power performance of at least 500 kW and
  • reach an annual electric power consumption of 5 GWh (i.e. 5 million kWh)
The higher annual electric power consumption is, the shorter the return period and the higher the subsequent cost savings will be. The latter is at least HUF 7 million per year even in the above case!
The above figures are true for consumers classified into the current MV-LV III. System Usage Fee category, which make up the vast majority of consumers. If, according to your electric power contract and invoice, you belong to the LV III. (“KIF III.”) System Usage Fee category, you can take it for granted that, even with an annual electric power consumption far lower than the above figure, you will have a quick return on your investment and will have a major annual cost saving afterwards!
With the help of our LV-MV (Low Voltage-Medium Voltage /”KIF-KÖF”/) transition calculator, you can check if it would be worthwhile for your company/institution to change from low voltage to medium voltage power use!

What steps must be taken if transition is worthwhile?

If it is economical for your company to change from low voltage to medium voltage power use, our staff can lend you a hand in the management of your project with the power suppliers (management of request submission and performance commitment), and undertake to plan the required transformer station and to supply, install, maintain and operate the required items of equipment.