What is business electricity?

Finding the right business electricity tariff is a quick and effective way to save money, whatever the size of your business. Here's all you need to know about getting the best electricity prices for your business.

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What is a business electricity tariff?

A business electricity tariff is a type of energy deal designed for business use. Although business electricity is often supplied via the same cables as home electricity and, in some cases, by the same energy suppliers, there are a number of differences between business energy and home energy, including:

  • Prices change more often, sometimes daily.

  • You get tailored quotes from suppliers and can negotiate better rates than home energy users.

  • Contracts last longer and there is less flexibility to switch.

  • Commercial energy deals don't offer a dual fuel option.

  • You pay more VAT, usually 20% instead of the 5% charged on home electricity tariffs, though some businesses are eligible for a reduced rate.

Although there are some differences, business electricity works mostly the same as your home service and shopping around is the best way to find the cheapest deal.

How much does business electricity cost?

There are two main charges to look out for on your business electricity bill:

  • Unit rate: This is what you pay for each unit of electricity you use. Electricity is measured in kilowatt hours (kWh), so your unit rate could be 10p per kWh.

  • Standing charge: This is what you pay to your energy company daily for maintaining your service, managing your account and reading your meter.

The cost of your business electricity will be based on:

  • The size of your business

  • Your business sector

  • Your legal status, e.g. sole trader, limited company or partnership

  • Your annual energy usage

  • Your postcode

  • Your business type

  • The credit rating of your business

What is the Climate Change Levy (CCL)?

It is a government tax that businesses with high energy usage must pay. It is intended to reduce emissions and encourage better energy efficiency.

Businesses pay a charge for each kWh of energy they use, but you do not have to pay the CCL if you are:

  • A business using small amounts of energy

  • A domestic energy customer

  • A non-profit charity

You can read more information about the CCL on the Ofgem website

Who can get a business electricity tariff?

You can get a business electricity tariff if you run any of the following:

  • A small, medium or large business

  • A micro business

  • A business from home

  • A hotel or B&B

  • A school, college or university

  • A charity

You can pick your own electricity tariff even if you rent your business premises, as long as your business is responsible for paying its energy bill.

If you move into a new property, you may need to pay a connection fee for setting up a new electricity tariff. You can check the cost of this when you get quotes from suppliers.

What is a micro business?

You may be classed as a micro business if you meet one of the following criteria:

  • You employ fewer than 10 staff

  • Your annual turnover is less than €2 million*

  • You use less than 100,000 kWh of electricity per year

*Turnover is in euros because the official definition is provided by the European Union.

Check the Ofgem website to see if you qualify as a micro business, because you may be given more flexibility to switch your energy service.

How to compare business electricity tariffs

The Big Six energy companies supply business electricity. They are British Gas, CNG, Opus Energy, EDF Energy, SSE and Scottish Power. However, you could save money by going with a lesser known supplier that specialises in business energy.

You can get quotes from energy companies by using:

  • Our comparison, which includes a range of tariffs from UK energy companies.

  • An energy broker who can find you a tariff based on your business needs. Be careful to check if any charges apply before you sign up.

What tariffs are there?

The main business electricity tariffs available are:

  • Fixed, where the price of your electricity stays the same throughout your contract

  • Variable, where the price of your electricity can change

  • Multi site, where your electricity company supplies several business locations

  • No standing charge, where you only pay a unit rate for the electricity you use

  • Eco, where the energy supplied to your business is environmentally friendly

Here is how to get the best electricity tariff for your business

How can you switch business electricity?

Switching your business electricity can save you thousands of pounds on your energy bill, but you need to time it right to avoid being tied in with your current supplier.

You can only switch when your current contract is coming to an end and you must give 30 days' notice to your existing supplier.

Here is how to switch your business electricity