Commercial Electricity Plans for Retail Spaces

Choosing a Texas Retail Electricity Plan for Your Store

If you own a retail store in Texas that meets both conditions below, you can choose an electricity plan online:

• Your monthly power bill does not exceed $2,500.
• You have less than five power meters.

Unless your retail store is very large, it probably meets both conditions. This means you choose among multiple electricity plans offered online based on your ZIP code — the process is very similar to choosing a residential plan.

• As of October 2024, a retail space using 20,000 kWh in Dallas or Fort Worth can expect electricity rates of around 8.4 to 13.1 cents per kWh.
• A retail space of the same size in the Greater Houston metropolitan area can expect rates of around 7.2 to 12.1 cents per kWh.

If your monthly bill exceeds $2,500 or you have at least five power meters, there is a different procedure. In this case, electricity providers will offer you customized electricity plans instead of a selection of predetermined plans. If you own a larger store, it will likely fall in this category.

Choosing an Electricity Plan for a Shopping Mall

A shopping mall will most likely have five or more power meters and monthly electricity costs of over $2,500. In this case, electricity providers offer customized plans based on the mall’s energy needs. A very compact strip mall with 2-3 retail spaces might be eligible for the commercial plans offered online if it has fewer than five power meters and monthly energy bills of no more than $2,500—however, this is a unique scenario.

If you need a retail electricity plan for a larger space with higher consumption, such as 100,000 kWh per month, you must ask for a customized quote. Typically, commercial electricity providers can send no-obligation quotes in around 2 to 3 business days.

Average Electricity Costs per Square Foot of Retail Space

The US EIA provides both average consumption data for retail buildings and commercial electricity rates by state. With this information, we can estimate the annual electricity cost per square foot in the different types of retail buildings.

 

Building Type	Annual Consumption per Square Foot	Electricity Cost at Nationwide Rates	Electricity Cost at Texas Rates
Retail stores (other than malls)	13.5 kWh/sq.ft.	$1.81 per sq.ft.	$1.23 per sq.ft.
Strip malls	20.6 kWh/sq.ft.	$2.76 per sq.ft.	$1.88 per sq.ft.
Enclosed malls	12.2 kWh/sq.ft.	$1.63 per sq.ft.	$1.12 per sq.ft.
Other retail locations	15.2 kWh/sq.ft.	$2.04 per sq.ft.	$1.39 per sq.ft.
Retail buildings (in general)	16.7 kWh/sq.ft	$2.24 per sq.ft.	$1.53 per sq.ft.

Keep in mind these are general figures based on average commercial rates, nationwide and specifically for Texas. Electricity bills in retail stores and shopping malls can vary widely depending on factors like building design, equipment efficiency and location. In regions with a deregulated electricity market, monthly energy costs also depend on the chosen electricity provider and the negotiated rates.

Energy Incentive Programs for Retail Spaces

Texas has multiple electric utility companies with different service areas. Utility companies in deregulated areas operate exclusively as “poles and wires” companies, delivering electricity from competing providers. However, some areas of Texas are served by regulated municipal utilities or electric cooperatives, which are both electricity suppliers and power grid companies. In these cases, the local utility is the sole provider, and you have no other options.

Throughout the state of Texas, both regulated and deregulated utility companies offer energy incentive programs for retail buildings. Here are four programs from major utility companies in Texas:

 

Program Name	Location	Description
Oncor Retail Business Incentive Program	Dallas-Fort Worth and surrounding areas	Oncor offers incentives for heating and cooling upgrades, lighting upgrades and solar power systems. These incentives are available from January to November, subject to annual funding limits that are published by Oncor early each year. Oncor has predetermined incentive rates for specific types of energy efficiency measures, but the program also covers custom upgrades that meet its performance requirements. The minimum incentive is $500 when implementing predetermined measures, and $10,000 for custom projects.
CenterPoint Energy Commercial Efficiency Programs	Greater Houston metropolitan area, excluding areas served by other utility companies	CenterPoint Energy has an energy incentive program with multiple benefits for commercial buildings, including: Free energy audits Electric equipment incentives Air conditioner tune-ups Demand reduction incentives CenterPoint Energy offers incentives for a wide range of equipment types, including LED lighting and energy-efficient HVAC equipment. Program incentives range from $500 per project up to 50% of total costs.
Austin Energy Commercial Rebates	Austin	This program offers rebates for a wide range of energy efficiency measures. The list includes: Ceiling and roof insulation Chillers Demand response measures Cooling towers High-efficiency motors High-efficiency lighting and controls HVAC upgrades and tune-ups Smart thermostats Austin Energy has a predetermined incentive rate for each type of building upgrade. On average, commercial buildings that participate in this program get a total rebate of $5,000.
CPS Energy Small Business Program CPS Energy Commercial & Industrial Program	San Antonio	CPS Energy has two programs for commercial buildings based on their size and consumption level. However, the programs cover similar energy efficiency measures, including: Lighting upgrades HVAC upgrades Refrigeration upgrades You can check the full list of eligible measures and their incentives rates at the CPS Energy website. Since January 2017, the program has provided over $8.5 million for small businesses and over $4.2 million for large commercial and industrial customers.

Solar Power for Retail Stores and Shopping Malls

Retail stores and shopping malls can take advantage of their roof space to install solar power systems. Regardless of your state, commercial solar systems qualify for a federal tax credit equivalent to 30% of their cost and accelerated depreciation for tax deduction purposes. These nationwide incentives can be combined with local solar rebate programs and state tax credits.

Commercial solar systems have an average cost of $1.44 per watt installed, according to the Solar Energy Industries Association (SEIA). The table below shows the estimated solar system capacity required for the different types of retail buildings, assuming a site with favorable sunshine conditioners, and the estimated cost of each system. In the case of large enclosed malls, we used the average cost of utility-scale solar systems, which is $0.95 per watt.

 

Building Type	Average Annual Consumption	Estimated Solar System Size	Estimated System Cost	Net Cost After Federal Tax Credit
Retail stores	207,000 kWh	150 kW	$216,000	$151,200
Strip malls	610,000 kWh	450 kW	$648,000	$453,600
Enclosed malls	8,852,000 kWh	6,600 kW	$6,270,000	$4,389,000
Other retail locations	195,000 kWh	150 kW	$216,000	$151,200

 

The payback period of a solar photovoltaic system can vary depending on multiple factors, especially local sunshine conditions and electricity rates. If your state, county or city offers local incentives for solar panels, you can expect a shorter payback period.

Typically, solar panel systems can achieve a payback period of less than 10 years in the US, while having a lifespan of over 25 years (assuming you install high-quality equipment). However, a payback period of less than 5-6 years is possible in sites with favorable conditions for photovoltaic panels. Alternatively, a commercial building can finance its solar energy project with a low-interest loan and reach positive cash flow from year one. Just keep in mind that interest payments will consume part of the savings achieved.

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.