Electricity for Restaurants

How Much is the Average Electric Bill for a Restaurant?

Here we estimate the typical electricity bills for a restaurant owner, based on the consumption figures from the table above. We also use the latest electricity price data from the US EIA.

Typical Electricity Bills in Restaurants at Nationwide Commercial Electricity Rates

The table below is based on the US average commercial rate of 13.58 cents/kWh, reported by the EIA as of October 2024:

Typical Electricity Bills in Restaurants at Texas Commercial Electricity Rates

The table below shows typical power bills in restaurants, specifically for Texas, based on the EIA average rate of 9.22 cents/kWh, which is 32% lower than the national average.

Energy Incentive Programs for Restaurants

Electric utility companies in Texas offer incentive programs for many types of residential and commercial buildings, including restaurants. Here are the top energy incentive programs for the restaurant sector in Texas.

Solar Power Systems for Restaurants

Compared with many other types of commercial buildings, restaurants have an above-average electricity consumption per square foot. If your restaurant has its own parking area or roof, you can save on electricity bills with solar panels.

According to the Solar Energy Industries Association (SEIA), commercial-scale solar systems have an average cost of $1.44 per watt — or $1,440 per kilowatt. The average US restaurant has an energy consumption of 214,000 kWh per year, which can be generated with a solar system capacity of around 150 kilowatts.

• A 150-kW solar system typically costs $216,000, but this figure decreases to $151,200 with the 30% solar federal tax credit.
• At 10 cents per kWh, an annual consumption of 214,000 kWh is equivalent to $21,400.

Based on these figures, a solar panel system can achieve a payback period of around 7 years in a restaurant. However, high-quality solar panels have a guaranteed lifespan of 25 years or more.

If you prefer to avoid the upfront cost of installing solar panels in a restaurant, you can finance them with a low-interest loan. There are also companies that offer solar leases for restaurants: you pay a monthly fee to use a photovoltaic system that is owned and operated by the provider.

What Are Demand Charges in Texas Small Business Electricity Plans?

One of the most important differences between residential and commercial electricity plans is the presence of demand charges. Residential consumers are only billed for the total amount of energy used, but many businesses are also billed for the demand caused by the grid.

Here is a simplified example that explains the concept:

• Assume two companies both use 100,000 kWh per month.
• However, one company reaches power consumption peaks of 500 kW, while the other company only reaches 250 kW.
• Both companies use the same amount of electricity, but the first company places twice as much demand on the grid.

For this reason, the company with a 500 kW consumption peak can expect higher demand charges.

In Texas, demand charges for businesses are calculated each year based on the concept of Four Coincident Peaks (4CP). ERCOT identifies the four hours when the grid experiences the highest demand during each of the four summer months: June, July, August, and September. The demand charges paid by your company will be determined by your measured demand during those four hourly intervals of high consumption (4CP).

Nobody knows when the Four Coincident Peaks will happen each summer, but ERCOT publishes alerts when a potential 4CP event is detected. If your company can reduce its kilowatt demand during these critical hours, you may achieve a drastic reduction of demand charges for an entire year (until next summer when ERCOT measures a new set of 4CP hours).

Demand Charges in Business Power Bills: A Quick Example

The TDU tariff category can have a major impact on business power bills. Here is a simplified example that demonstrates how this works:

• Assume two small businesses are consuming 3,500 kWh per month with an energy charge of 9 cents/kWh, in the Oncor service territory.
• However, Company #1 has a peak demand of 8 kW while Company #2 reaches 16 kW.

In this case, both companies get the same energy charge of $315 ($0.09 x 3,500 kWh), but their TDU charges are very different.

Company #1 has a peak demand of 8 kW, which means there is a fixed fee of $6.87 and a variable fee of 3.7984 cents/kWh. The total TDU charge is $139.81, and the total amount billed after adding the energy charge is $454.81.

Company #2 has a peak demand of 16 kW, which means there is a fixed fee of $32.43 and two variable fees: 0.0642 cents/kWh and $10.332973/kW. The total TDU charge is $200.00, and the total amount billed is $515.00.

Note how the power bill increases by over $60 due to TDU charges for Company #2, even when both have the same consumption and energy price. Residential consumers only need to watch their kWh usage, but peak demand is also important for businesses.