Getting the best small business electricity price – How to find the best rates available

If you are a small or medium-sized business looking at lowering your overheads, then your energy costs can be one of the biggest outgoings for business owners and it would make sense to look at switching to a business electricity supplier offering a better deal to save yourself some money.

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    Because small and medium-sized businesses vary much more than domestic households, it can be difficult to provide an average saving by switching supplier. The savings made will depend on the size and age of your business premises, the number of staff working on-site and whether you run a lot of electronic equipment or industrial machinery.

    However, it makes a lot of sense to know your options when it comes to your business electricity package. You will want to have access to the best business electricity prices the UK has to offer, so it is well worth comparing your existing plan with the latest business electricity deals available and making a switch to a better deal – as long you don’t end up paying expensive exit fees that could negate any potential savings you can make.

    Table of contents →
    Business energy vs. domestic 
    Help for microbusinesses
    The best business electricity suppliers
    How to find the best business electricity rates
    Average small business energy usage
    Regional variations
    Summary
    Business energy FAQ

    Business electricity vs. domestic electricity

    Business and domestic electricity suppliers differ slightly because while they offer both fixed-rate and flexible plans for electricity to domestic customers, a fixed rate tends to be the standard tariff given to business owners. After all, it can offer them some protection against fluctuating fuel prices.

    The downside of having a fixed rate for your business is that your tariff price won’t go down if the wholesale price of energy drops. However, while flexible tariffs are preferred by most domestic customers because they can make savings, you could also end up paying more on a flexible tariff than you would have on a fixed rate tariff. 

    Unlike domestic household energy supplies, as a business owner, you cannot opt for dual fuel tariffs for your business use. (This applies to business gas too.)

    A lot of smaller business owners may wonder if it is cheaper to use business electricity or domestic electricity. However, this isn’t an easy question to answer. With domestic customers now having price caps put in place, they will never pay above a certain amount for their electricity. But these price caps are frequently reviewed by the government so are never set in stone.

    Because business electricity doesn’t have any price caps in place, it can be more expensive for a small business to choose a business supply over a domestic supply, especially if they are operating as a sole trader and working from home or a small workspace on their own premises. 

    Big businesses almost always pay less with business rates rather than domestic rates, because of their higher usage. For many of the UK’s growing solo entrepreneurs, it pays to compare both business electricity tariffs and domestic tariffs to ensure they get the best deal that suits their business use. 

    Help for microbusinesses

    While small and medium-sized businesses can benefit greatly by comparing business electricity deals and make the right choice to help save them some money, the rules for microbusinesses are a little different. At the time of writing, 76% of businesses in the UK are owned and operated by a single person.

    According to the Office of National Statistics (ONS), microbusinesses are classed as small companies that either:

    • Use less than 100,000 kWh of electricity per year
    • Use less than 293,000 kWh of gas per year 
    • Have between 0-9 employees (or their full-time equivalent) and have an annual turnover or balance sheet no greater that approx 31.8 million

    If your business is considered a micro business it should be much easier for you to terminate your contract and switch to a new business electric supplier compared to a larger business. 

    As a microbusiness, your business electricity supplier must provide you with extra support with switching by putting the end-date and notice period for your contract on all bills, detailing your annual energy consumption and how your old tariff compares with their latest deals.

    Comparing the best business electricity suppliers

    While it is best to get several quotes from the major business electricity suppliers to compare to get the best business electric rates, you should also keep reviewing and comparing prices as you may be able to switch to a better tariff with a different supplier or even with your current supplier when they offer a more attractive deal.

    Here we have lined up five of the most recognised business electricity suppliers in the UK. Your actual electricity prices will be based on your postcode and average energy consumption. Those moving into new business premises may be put onto a deemed/out of contract tariff, which initially may be more expensive than a regular tariff. 

    Supplier name:Company information:Tariffs:Special notes:
    British GasThey can install, service and repair your commercial gas boiler, plumbing and drainage. They have a business moving team to make switching easier.They offer a mix of fixed-term and variable tariffs.Fixed-rate energy plans mean that the unit rate stays the same for one, two or three years of your plan.
    NpowerThey have dedicated business switching consultants to help you move over quickly. Npower offers a few tariffs to suit different businesses. They offer fixed-term contracts for up to four years. Cash or cheque payments come with a 5pc surcharge.  They offer discounts on Business Rewards including cinema vouchers and free eye tests.
    Scottish PowerThey offer fairly standard fixed-rate business packages. The Business Fixed tariff is fixed for up to three years. You can move to another Scottish Power tariff with no exit fee.You can download the ScottishPower app on Google Play and iOS to manage and pay your bills.
    Bulb for Business Bulb for Business launched in 2015. Its costs move with the market, so might not be the right choice if you want the security of a fixed tariff. No out-of-contract price hikes or charges for leaving.You can choose between renewable or non-renewable sources.  Bulb works on a single ‘Vari-Fair’ tariff system calculated on average you’ll pay £2161 for a single site with a standard 1 rate meter in the East Midlands region, based on a business consuming 16,000 kWh per year, paying by direct debit with online billing. The standing charges for gas and electricity are both 27.40p per day.For every new member who signs up, £2 goes to the Bulb Foundation which goes to making grants for charities and social enterprises tackling the climate crisis.
    Utility WarehouseThey install and service boilers.Prices are set lower than ‘fair price’ set by Ofgem.UW doesn’t offer specific tariffs. They arrange your energy deal over the phone. Spending perks: Earn up to 7pc cashback on your UW Visa card at leading UK stores. The cashback you earn comes straight off your energy bill.If you sign up to four or more of its utilities, you get up to £200 to cover termination fees from your previous supplier and an extra 10pc discount after one year with the firm.

    Finding the best electricity rates

    The quickest way to find the best business electricity deals from suppliers is to search the leading business electricity comparison sites. There are a few comparison sites to choose from and they make it easy to compare prices with a few keystrokes. 

    This means you can check to see what’s on offer across the energy market without having to complete multiple quote forms with each energy company to get a quote. The leading price comparison websites include:

    • Money Compare (from Which?)
    • Compare the Market
    • Confused.com
    • Go Compare 
    • Money Supermarket
    • uSwitch 

    Price comparison sites will ask you a few questions about what you are looking for and for your personal details, then will deliver a list of personalised options for you to compare.

    If your electricity contract is coming up for renewal with your existing supplier, it is worth contacting them directly to see if they can offer you a better deal. If you find a cheaper deal through a price comparison website, your existing company may want to keep your custom and offer you a better deal to stay with them. 

    Average small business energy usage per annum

    According to figures from the British Business Energy Co., the average small business uses 22,500 kWh a month for gas and 32,500 kWh of electricity per annum energy use.

    Possible business energy usage scenarios according to business size: 

     ElectricityElectricity
    Business sizeLower end usage (kWh)Higher-end usage (kWh)
    Microbusiness500015000
    Small1500025000
    Medium2500050000

    Average business electricity usage and rates per kWh:

    Business sizeAnnual usagePrice per kWhStanding chargeAvg. Annual cost 
    Microbusiness 5000-15000 12.5p27.0p£1,349.00
    Small business 15000-3000011.0p25.0p£2,566.00
    Medium business 30000-5000010.5p22.0p£4,208.00

    Source: Gov.uk

    Don’t forget that most small and medium-sized businesses will pay 20% VAT on their business electricity use. There are exceptions to this with small home-based businesses where at least 60% of the electricity used is for domestic purposes or businesses that use less than 33-kilowatt hours per day of electricity to one customer at any one of the customer’s premises. These smaller sized businesses only pay 5% VAT.

    Regional variations

    Because business electricity prices are highly individualised, providers may give you an energy quote based on your postcode as well as your average consumption. But why is this? What makes one region more expensive than the other?

    The reason why there are regional energy price variations is mostly because of supply and demand: If your business is in a rural area with few energy consumers, your price per-kWh could be more than if you were based in a more built-up region. 

    This is because when energy suppliers are aware of high use areas, they can buy in bulk from power generators for lower prices. This means that customers in more populated areas can get a lower cost per unit.

    Most of the leading UK energy suppliers use the regional difference to set their prices. For example, E.ON’s deemed rates can vary greatly from one end of the country to the other. Their average rate is from 17.66 p/kWh in London to 20.55 p/kWh in North Scotland, making a 14% difference in energy prices between businesses in the north and the south.

    Because of this regional variation in energy prices, you may notice that the cheapest business electricity supplier in your region won’t necessarily be the cheapest supplier in the region next to yours. So there is no guarantee that one single business electric supplier is going to be the cheapest in the whole of the UK.

    Summary

    So to summarise, the best way to find the cheapest business electricity is to never renew your existing energy contract without first comparing the energy market to see if you can secure yourself a better business electric deal. 

    Check to see if your current electricity supplier offers a better tariff option that would save you some money. You shouldn’t be charged an exit fee when switching tariffs while remaining with the same supplier.

    Take a look around at some energy brokers and suppliers that are not on business electric comparison sites to see what they have on offer.

    Business electricity FAQ

    How much does the average business spend on electricity?

    The average cost of business electricity in 2020 is 13.93 pence per kWh.

    What is a kWh?

    A kilowatt-hour (kWh) is a measure of how much energy you’re using.

    What is the price per kWh for business electricity in 2020?

    In 2020, the average unit price for business electricity is 13.93 pence per kWh.

    Can I switch business electricity supplier?

    Yes. Your new electricity provider will take care of organising things. The switch should take around two to three weeks, according to Ofgem figures.

    What is a unit of electricity?

    Units of electricity are measured in kilowatt-hours (kWh’s). One unit of electricity is equal to a one-kilowatt hour (kWh) of electricity used.

    Our website content is for general interest use and should not be taken as advice for you or your business. You should always talk to an accredited professional advisor if you require advice. Read our full disclaimer.