Comparing cheap business electricity rates and tariffs for commercial enterprises is generally a little less straightforward than comparing rates for consumers.
The reason is that there are far more business electricity plans out there than there are for home consumers. Which plan is right for you, and how much it will cost, will depend on the type, size and location of your business.
Plus, unlike domestic customers, businesses don’t benefit from price caps.
The table below compares the current business electricity prices UK energy companies are offering on their variable rate deemed contract. We’ve included both the unit price (price per kWh) and the standing charge.
These rates are essentially the worst-case scenario. You can almost certainly pay far less just by entering into a formal contract (either fixed term or variable) with a business electricity supplier.
Business Electricity Prices*
* Notes about tariff comparison (Updated 11/01/2021): Prices were believed accurate at the time of publication (11 January 2020) and are based on non-half hourly contracts, (profile classes 01-04) at deemed rates unless these were not available, in which case default and/or out of contract were used. Both standing charges and price per kWh (unit price) are shown. If tariffs differed across regions, the price in London was used. The first 6 companies listed are all the big six energy suppliers. Sources for all data can be found at the bottom of this page. While we attempt to provide the most accurate information possible, we take no responsibility for any inaccurate pricing displayed above. Contracts and prices are the sole prerogative of the energy companies themselves and we have no control over them and are subject to change at any time.
Current Business Electricity Tariffs Compared
Below we look at the cost differences between the deemed contract rates above and the actual rates from some leading suppliers below.
(Prices correct as of 01/01/2021, based on 03 profile electricity meter and annual usage of 25,000 kWh)
British Gas Business Tariffs
British Gas currently offers tariffs as low as 14.82p per kWh with a 24.69p per day standing charge under their British Gas Lite brand. Or 15.22p per kWh and 29.45p per day standing charge under their regular brand.
EDF Energy Tariffs
EDF Energy’s business prices start at 15.90p per kWh and a daily standing cost of 25.00p.
E.ON’s business electricity tariffs are priced at a reasonable 14.86p per kWh but come with a relatively high standing charge of 31p per day. Although it should be noted this daily standing charge is 1/3rd of the rate you’d be charged under their deemed contract.
nPower’s in-contract business tariffs are as low as 14.00p per kWh with the daily standing charge of 23.54p. You would save up to 37% switching from their deemed rate to their best tariff.
Scottish Power Tariffs
Scottish Power has business tariffs as low as 14.80p per kWh with a standing charge of 26.15p per day.
SSE has tariffs are current among the highest of the big 6 with their best being just 15.38p per kWh and a daily standing charge of 29.85p.
Octopus Business Tariffs
Octopus Energy is a green-only energy supplier that has tariffs as low as 15.26p per kWh and a standing charge of 24.10p per day.
Opus Energy Tariffs
Opus energy business rates start from 15.26p per kWh with a 25.00p per day standing charge.
Total GP Tariffs
Total GP offers tariffs from 15.19p per kWh and a standing charge of just 30.34p.
What’s the average price per kWh for business electricity in 2021?
Here are the average electricity rates in p/kWh that businesses of different sizes in the UK pay according to UK Government (excluding CCL) in 2021:
- Very Small: 16.36 p/kWh
- Small: 14.38 p/kWh
- Small/Medium: 13.20 p/kWh
- Medium: 11.81 p/kWh
- Large: 11.11 p/kWh
- Very Large: 10.20 p/kWh
- Extra Large: 10.09 p/kWh
- Average: 11.99 p/kWh
Therefore, if you’re a small business and paying more than 14.38 p/kWh for your business electricity contract, you’re paying more than average.
The government has also reported that: “the average price of electricity, including CCL, has risen by 8.0% in real terms over the past five years and by 4.6% on the previous year.”
What’s The Difference Between Unit Rate and Standing Charge?
Business electricity prices are made up of two separate charges. These are:
- Unit Rate: The unit rate is the price you pay for the amount of electricity you use and is given in pence per kWh. This is the bulk of what you pay for electricity.
- Standing Charge: The standing charge is the price you pay for your business to have access to electricity and is priced in pence per day.
A word of warning:
Most price comparisons will focus on the unit rate rather than the daily standing charge, because it generally had the biggest impact on your bill. However, you should not ignore the daily standing charge as it can make a big difference it how much you pay.
Here’s an example.
Say you’re a business using 10,000 kWh per year paying 18 p/kWh with a daily standing charge of just 25p per day. You’re offered a new contract for only 14 p/kWh (a 20% savings!) but with an increased daily standing charge of 125p per day.
Under your old contract you’d pay a total of £1,891.25 per year for electricity (£1,8000 for usage plus £91.25 for standing charges).
And while you might expect to pay 20% less under the new contract, you’d actually end-up paying £1,856.25 a mere 2% savings, because the higher daily standing charge ate up all your savings. (£1,400 for usage + £456.25 for standing charges).
How To Get Cheaper Business Electricity Rates?
The tariff comparison above is effectively comparing the worst rates offered by each electricity supplier. Deemed/Out-of-contract pricing only occurs when there is no other pricing agreement in place.You can save money on these by either using your electricity at night, being a large energy customer and/or switching your electricity to another business electricity supplier.
For example, E-On offers business customers night-time rates that are as much as 22% cheaper per kWh than their daytime rates whereas Bulb offers business rates as low as 12.05p per kWh (in London).
However, you may be able to do even better than 12.05p/kWh with a fixed term contract.
Fixed term contracts often offer savings of 40-60% below the rates listed above, with some still offering electricity at prices below 11p/kWh.
Therefore, the single best thing you can do to save money on your business electricity bill is to compare contracts. You can get started now by filling in the form at the top of the page.
Do small businesses pay more for electricity than large ones?
There are a few reasons why this happens. The first is that big buyers can get volume discounts and are also more sophisticated energy users.
However, another major factor is the fact that big businesses shop around for their electricity prices, whereas the majority of small businesses don’t.
Should I Switch Electricity Suppliers?
If you’re paying significantly more than the average rates listed above than you should certainly consider it. Switching business electricity suppliers is relatively easy and shouldn’t affect your actual supply.However, price isn’t the only consideration. You should also take into account the reliability of the company and customer service quality. Energy companies are notorious for having poor customer service ratings, so picking a supplier with better overall reviews may be worth paying a slight premium for.
But you should be aware that there is no cooling off period when switching business electricity suppliers and that your current supplier can refuse the switch if you’re still under contract with them and/or you have outstanding debt.
How Much Can I Save If Switch Suppliers?
The answer of course is that depends on your current tariff rate, your usage, and the availability of deals in your area.
As an example, a very small business using 10,000 kWh per year that switched from paying the average rate of 16.36 p/kWh to a rate of 12.05p/kWh would save £431 per year (assuming the same daily standing charge; see above).
Obviously, the savings could be lot bigger if you use more energy, your current tariff rates are higher, and/or you can get a lower price for a new tariff.
What Types of Business Electricity Tariffs Are Available?
There are generally two types of tariffs for businesses on standard non-Half Hourly meters.
- Fixed Rate Contracts: The name really says it all. These contracts fix the price you pay for a set period of time. Typical contacts last between 1 and 3 years, although some suppliers offer them as long as 5 years. These are recommended for most small business customers as they tend to offer the best value.
- Variable/Flexible Rate Contracts: Again, the name says it all. The price you pay will depend on the wholesale price of electricity, which means it can go up or down. The main advantage these types of plans offer over fixed rate ones is that they usually allow you to switch suppliers at any point.
Bigger customers who use more than 100,000 kWh of electricity each year will require a Half-Hourly meter and will generally be able to get a bespoke tariff depending on when they use their electricity.
Finally, you should be aware that dual fuel contracts do not exist for business customers. You can of course get your electricity and gas from the same supplier, but it will be two separate contracts and may not be the cheapest option.
Are There Regional Variations In Business Electricity Rates?
Some UK suppliers charge different rates depending on which part of the country your business is located in. This can be due to the location of their power plants, transmission costs, demand and/or the availability of energy infrastructure.
The more it costs them, the more they’ll charge your business.
For example, the map below compares how Bulb’s business electricity rates for small businesses vary by UK region in 2021. The regions are based on which Distribution Network Operator runs the electricity network.
In the example above, prices vary between a low of 12.05 p/kWh in London to a high of 13.80 p/kWh in North Wales, Mersey & Cheshire a difference of 15%!
Large customers would never generally pay that much, as they generally try to buy as close to the wholesale electricity price as possible, which over the last year has never gone above 8.2 p/kWh, even at peak times.
However, the example does show why it’s important to compare business electricity prices. Just because a given energy company offers the cheapest electricity prices in one region, does not mean it will offer the best deal in all regions.
Are UK Business Electricity Rates Cheap?
UK business electricity prices including taxes for medium consumers were 48% above the EU15 median of 8.3 pence per kWh. Moreover, UK rates are 49% above the IEA median price and twice those of the United States.
Therefore, in comparison to both European and global standards UK commercial electricity rates not cheap, but very expensive.
Are business electricity rates cheaper than domestic?
This very much depends on the size of your business. Above it shows that the average business electricity rates were 11.99 p/kWh but that varied widely from a high of 16.36 p/kWh for the smallest businesses to a low of 10.09 p/kWh for the largest ones.
To put that in some comparison Bulb currently charges domestic customers 16.0808pp per kWh for electricity in London.
So yes, bigger businesses do pay substantially less for electricity than domestic customers, but smaller businesses can often end paying more.
The big differences in prices between domestic and business customers is that domestic customers have a price cap, whereas as there is no price cap for businesses. Moreover, you have far fewer rights to get out of a contract as a business (only during renewal period, no cooling-off, etc.) which means you can easily get locked into paying far more than you should for your business energy.
To make matters even more complicated, switching business energy suppliers is not as simple as it is for domestic energy. This means fewer businesses do it, which is too bad because the savings are often substantially greater.
Why Is Business Electricity In The UK So Expensive?
Business electricity rates in the UK are expensive for a variety of reasons. A few of them include the fact that taxes are high, the high cost of decarbonising UK energy (which at least has been extremely successful), other energy investments and schemes, high gas prices (biggest source of UK electricity generation) and the fact that the pound has weakened in recent years against the Euro driving import prices higher.
All this makes it more important than ever to compare business electricity tariffs.
Why Is My Business Electricity Bill So High?
Obviously, having among the highest per kWh prices in the world means the average UK business electricity bill is going to be higher than it would be elsewhere. However, high prices alone might not explain why your bill is so high.
The biggest reason why your electricity bill is likely to be so high is that you’re on a bad tariff and have not compared prices recently. The vast majority of UK businesses (up to 75%) don’t actively engage in energy market on a regular basis. This means they’re stuck paying more than they should for their electricity. You can avoid their fate simply by getting a quote here.
You should check to make sure you’re not on out of-contract or deemed rates as these are absurdly high. Given that most businesses aren’t you might also want to check if you’re on a variable rate contract as this can increase if energy prices increase.
Finally, your electricity bill might be high because simply because you’re using too much of it. Try to see if you can invest in new more energy efficient appliances, equipment, light bulbs, etc. Also make sure they’re turned off when you aren’t using them as this can further reduce your total energy use.
What Are Other Important Things To Understand About Commercial Electricity Pricing?
Fixed term contracts will save you the most money on your electricity bills, but they are by no means the only thing that affect your rates. The single biggest factor is the wholesale price of electricity.
The following will all also have a major impact on how much you pay and which contract will ultimately be best for you and your business:
- Energy usage
- Electricity Supply Type/Meter Type
- Half-Hourly Metered (HH) & P272 Plans
- Company Credit Rating
- Renewable Energy
- Rollover contracts
- Contract Length
These are discussed in greater detail below.
The amount of electricity you use will have a big impact on the tariff you end up paying. While the more you use, the more you’ll pay overall. This means you may qualify for lower business electricity rates.
Moreover, if your business uses less than 100,000 kWh of electricity per year, you may be considered a micro-businesses.
Electricity Supply Type/Meter Type
What type of meter you use and what type of energy profile your business has will affect how much you pay. Business with profiles 03 or 04 generally will pay less than those with profiles 05-08. However, this is in part because of when electricity is expected to be used.
Half-Hourly Metered (HH) & P272 Plans
If your business falls under profiles 05-08, then P272 makes it mandatory to be use advanced half-hourly metering. Using this type of metering may have an impact on the tariff you end up paying and should be something you ask about when getting your quotes (see example above).
Company Credit Rating
Some UK energy suppliers will look at your credit rating before offering you a contract. Generally speaking, the better your business’s financial health, the lower prices should be.
Some energy companies, such as Bulb, NPower, Ecotricity and Good Energy are now offering plans that only include business electricity from renewable sources. While these plans are much better for the environment, they may cost more than plans offered by other companies.
You can generally save money by shopping around just before your current contract ends. If you don’t sign a new fixed term contract, you may be rolled over into a deemed rate or default contract and end up paying the prices listed above.
Most commercial and business electricity contracts are on fixed 1-year terms. However, most energy companies are now offering 2 and 3-year contracts. While these contracts can save you money, just be sure to read the fine print as you may face steep cancellation fees if you try to get out of your contract early.
How To Get The Cheapest Business Electricity Quote? 5 Things You Need To Know
- Know how much electricity you’re using each year
- Know at what time(s) of day you use the most electricity
- Known your MPAN (Meter Point Administration Number)
- Know your business profile and metering type
- Know when your contract is up for renewal
What to do next?
Sources for prices listed above: