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- Expert advice & guidance
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What is business energy?
Business energy is the gas and electricity supplied to commercial premises under a commercial energy contract. Just as with household energy, you pick a supplier to provide your gas and electricity for a set period. Any business in the UK with its own premises needs a commercial contract, as you cannot take out a domestic energy policy for business premises.
Business energy is vastly different to domestic energy. Businesses use energy differently from households, from the hours they operate to the size of the building and the machines they run, so quotes are based on each organisation's industry, location, staff and working hours rather than being off the shelf. Contracts are also split by fuel: there are no dual-fuel tariffs for businesses, so gas and electricity are quoted separately.
Because of this complexity, Quote Goat does not show live business energy prices online. Instead, when you submit our form, our systems match you with a suitable business energy expert who contacts you, compares tariffs for you and offers unbiased, no-obligation advice.
What types of business energy contract are there?
Business energy contracts come in a few forms. Which suits you depends on how much certainty you want over your unit rate and where you are in your contract cycle.
Fixed rate
Your unit rates are fixed at a set price for the duration of the contract. This protects you against hikes in business energy prices and helps you forecast spending, although your bills will still vary with how much energy you use.
Variable rate
Your unit prices go up and down in line with market prices for the duration of the contract. You could pay less, but you also risk paying more if the market rises, so monthly bills can vary considerably.
Deemed rate
A rolling deal that businesses are put on when they take on new premises and have not yet agreed a contract with a supplier. It keeps your operations running but is expensive and one to get off as soon as possible.
Rollover
Applied if there are no renewal provisions and you have not agreed a new contract before your current deal ends. Rollover contracts are typically very expensive and can be tricky to leave, so compare deals and tell your supplier your intentions within the renewal period.
Renewable (green) tariffs
You can ask for renewable energy options when you discuss your requirements with the specialist. Some business energy brokers and suppliers solely provide green energy tariff plans.
How can I cut my business energy bills?
Comparing tariffs before you commit is the first step, but there are other things you can do to keep costs down and avoid expensive default rates.
Compare before your contract ends
There is usually a switching window as you near the end of your contract. Compare quotes in good time and let your current supplier know if you plan to change, so you are not moved onto an expensive default contract.
Avoid out-of-contract and rollover rates
Out-of-contract rates apply if your contract ends and you have not made alternative arrangements. They are expensive and based on how much energy you use until you agree a new contract.
Review your usage with an energy audit
A business energy audit shows where energy is being used across the business and where it can be reduced.
Ask for a smart meter
Request that your supplier installs a smart meter so you can review your consumption closely.
Adopt energy-saving workplace habits
Introduce efficient workplace energy practices to reduce day-to-day usage.
Consider renewable sources
Implementing renewable energy sources to supplement your usage can lower bills, and Ofgem mentions small business grant schemes to help businesses cut carbon emissions and become more energy efficient.
Check for VAT and levy reductions
Charities and not-for-profit organisations can reduce the VAT on their business energy and are exempt from the Climate Change Levy by filling in a VAT declaration form with their supplier.
What details do I need to get a quote?
Have these to hand before you start.
Business name and postcode
The name of your business and the postcode of the premises to be supplied.
Email address
So the specialist can send you details of the tariffs they find.
Phone number
The specialist calls to introduce themselves and later to talk you through the comparison.
Recent energy bills
If you have them, your recent business energy bills help the specialist compare like for like.
Am I a microbusiness, and what protections do I get?
It is important to work out whether you are a microbusiness, as certain rules apply to the way you are billed. Ofgem says a microbusiness meets any one of the following:
| Measure | Threshold |
|---|---|
| Employees and turnover | Fewer than 10 employees (or full-time equivalent) and yearly turnover or balance sheet of no more than €2 million |
| Electricity use | Less than 100,000 kWh a year |
| Gas use | Less than 293,000 kWh a year |
If you qualify, you get extra protections:
- Clarity: brokers and suppliers must set out what you are signing up to and all the costs involved in straightforward language.
- Protection from back-billing: you cannot be charged for unpaid energy older than 12 months if you did not have an accurate bill for it before.
- Shorter notice periods: a shortened notice period applies to rollover deals, and there is no notice period for other contracts.
What is the Climate Change Levy (CCL)?
The Climate Change Levy is an environmental tax charged on your business energy consumption, designed to encourage UK businesses to operate more efficiently and reduce emissions in line with the UK's goal of Net Zero by 2050. It applies to businesses in the industrial, public services, commercial and agricultural sectors and is charged on taxable commodities for heating, lighting and power. Your supplier collects the CCL as part of your payments and passes it to HMRC. Charities and not-for-profit organisations are exempt. You can find out more on the GOV.UK website.
Can I switch business energy supplier when moving premises?
Yes. If you are moving to new business premises you can take your current supplier with you, or switch to a new contract. Deal with it as early as possible, as out-of-contract rates are expensive and commercial plans can be tricky to leave in some cases.
If you are keeping your supplier, let them know your plans. If you switch, your new supplier tells your old supplier for you. Take meter readings when you leave the old premises and as soon as you get the keys to the new ones.
What does a business energy broker do?
Business energy brokers are contractors or companies that find and present deals and suppliers for your business's energy needs. They can also look after your account, letting you know when your contract is due for renewal or if there are issues with your supplier, manage the whole switching process and review your energy efficiency across the business.
Brokers charge a fee for their services, often incorporated into the rate you pay or sometimes as a lump sum. Ask for all terms, including costs and obligations, to be sent to you in writing before you agree to anything.
Ready to compare business energy?
One short form, then a business energy specialist calls you with prices.
Frequently asked questions
Who needs a business energy supplier?
Any business in the UK with commercial premises needs a commercial energy contract. You cannot take out a domestic energy policy for business premises.
Do I need business energy if I work from home?
Not necessarily. You need to be registered as a business, as sole traders cannot get business energy, and as a commercial customer you would pay extra VAT, additional levies and charges, with your meter placed on a different profile. If you are a one-person business working from home, domestic energy is usually fine, and you can claim the electricity and gas you use while working as a legitimate business expense on your tax return.
How long are business energy contracts?
UK business energy plans can last up to five years or more, although most commercial suppliers offer deals of one to three years. You typically do not get a cooling-off period after purchasing a business contract, unlike a domestic one, so it is important to compare quotes before committing.
Is business energy cheaper than domestic energy?
The unit cost of business energy is usually cheaper than domestic unit prices. However, businesses use a lot more energy and must meet more criteria and pay additional levies, so overall bills are generally higher.
Does the energy price cap apply to business energy?
No. The residential energy price cap restricts what suppliers can charge households for gas and electricity, but it does not apply to business energy tariffs.
Can I get a dual-fuel tariff for my business?
No. Commercial energy contracts are split by fuel, so there are no dual-fuel tariffs for businesses. Gas and electricity are quoted separately, and the specialist who contacts you compares both for you.
How do business energy prices differ for charities and not-for-profits?
Charities and not-for-profit organisations are eligible for a 15% reduction on the VAT they pay on business energy, taking it down to 5%, and are exempt from the Climate Change Levy. Contact your supplier and fill in a VAT declaration form to apply the reductions.
Can I get renewable energy for my business?
Yes. When you discuss your requirements with the specialist you can request renewable energy options, and there are brokers and suppliers who solely provide green energy tariffs. Ofgem also mentions small business grant schemes to help businesses lower their carbon emissions and become more energy efficient.
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Written by Michael Foote, Insurance & Finance Expert
Founder of Quote Goat, with over 20 years' experience in finance and insurance. He has appeared on TV and in Forbes, The Telegraph and The Metro.