✔ Learning about business energy can get you a better deal on your energy
✔ You could earn money for generating your own renewable energy
✔ Cutting your energy usage can save money and reduce your carbon footprint
Energy is essential for the day-to-day running of all businesses. Without a supply of electricity and gas, retail stores can’t sell products, hotels can’t keep their guests warm, and warehouses can’t locate goods. Despite its importance, energy isn’t something that a lot of business owners give much thought to. So if you’re wondering whether you’re paying over the odds for you gas, or don’t know what type of electricity contract is right for your business, you certainly aren’t alone.
We’re here to help you get an understanding of business energy. This guide covers everything from how much gas and electricity costs, to what the different contracts and meters are and how you can cut down your business’ energy usage.
What's in This Guide to Business Energy?
How Much Does Business Energy Cost?
Exactly how much you pay for your business energy is determined by lots of different factors including the location of your business premises, how much energy you use and what contract you have (more on these below). There is not a ‘one size fits all’ price for gas and electricity. Instead, each business will be given bespoke energy quotes that are tailored to their personal circumstances.
When comparing quotes from different energy suppliers, you should focus on 2 main costs: the unit cost and the standing charge. These make up the majority of the cost on your energy bill.
• The unit cost is the cost of energy itself – the price you pay for each unit (or kWh) of gas and electricity your business uses.
• The standing charge is a daily fee that an energy supplier charges you for providing your business with gas and electricity.
To give you an idea of how much business energy costs, we have provided you with the average unit cost and standing charge for gas and electricity.
Av. Unit Cost (p/kWh)
Av. Standing Charge (p/day)
As we’ve already mentioned, the cost of business energy varies from one business to the next, but as a guide, if you are quoted a price cheaper than those above, you’ve probably got a good deal. Additional costs will be added to your energy bill, including 20% VAT and an environmental tax on each on each kWh of energy your business uses, known as the Climate Change Levy (CCL).
How to Get Business Energy Quotes
To get the most accurate prices for your business energy, you should get quotes from as many different suppliers as possible. This will ensure you’ll get the best deal on your gas and electricity. But getting quotes needn’t be a time-consuming or complex task. By using our expert comparison service, you can get quotes for your business quickly and easily.
All you have to do is fill in this form by answering a few simple questions about your business and its energy needs. Our carefully selected partners will then find you the best deals on business energy from as many suppliers as you’d like. It’s then up to you to choose a deal that’s right for your business, and we’ll handle the sign-up and switching process. It’s as simple as that!
Business Energy Contracts
There are heaps of different business energy contracts which can often be overwhelming, but it’s worth familiarising yourself with what’s on the market. This will make it easier for you to decide which contract is right for you; the last thing you want is to get tied into the wrong contract because you could end up paying through the nose during the lifetime of the agreement.
So, what are the different types of energy contracts for businesses?
Fixed. A fixed contract is one whereby the unit cost of your gas and electricity stays the same throughout the entire length of your contract. This means that you’ll be protected from changes in the market price of energy – so it’s a great option if prices suddenly soar! Fixed contracts are typically between 1 and 5 years in length, and you won’t be able to leave until the contract expires.
Flexible. With a flexible contract, you’re essentially buying your gas and electricity from the wholesale market. This means that the amount you pay for your energy will change in accordance with changes in the wholesale price of energy. So in March you could be paying just 10p/kWh for your electricity, while in April you could be paying a huge 25p/kWh. Flexible contracts often don’t have an expiration date, meaning you’re free to leave at any time.
Green. A green contract means that a) some (or all) of the energy you buy from a supplier is produced by renewable resources such as wind or biomethane. Or b) while the energy itself is not from renewable sources, your supplier will invest in sustainable projects with the money you used to buy energy from them. Green contracts are therefore ideal for businesses who want to be eco-friendly. They can generally be fixed or flexible in nature.
Dual fuel. With a dual fuel contract, you get all your energy from one supplier rather than having separate contracts for gas and electricity from different suppliers. This can make it easier for you to manage your business energy. Dual fuel tariffs can be fixed, flexible or green.
Rollover. Rollover contracts are the most unfavourable type of contract and something that all business owners want to avoid. If you fail to terminate your existing contract before its expiration date, your supplier will automatically sign you up to a new 12-month rollover contract. Rollover contracts are extremely uncompetitive and you could be paying up to 85% more for your business energy than you need to be.
Business Energy Meters
Energy meters are small devices that record exactly how much gas and electricity your business uses. They’re extremely important for making sure that your energy bills are accurate and up-to-date, and can be installed inside or outside of your business premises; you’ll need separate meters for your gas and electricity.
There are lots of different types of energy meters available. The one that is right for your business will depend on factors such as the size of your organisation, your opening hours and what industry you work in.
Standard meter. Also known as a single meter, a standard meter has the same unit cost for electricity at all times of the day, regardless if it’s 6am or 11pm. Standard meters are best for businesses that use most of their electricity between 8am and 10pm, Monday to Friday.
Economy 7 meter. With an economy 7 meter, you’ll be charged 2 different unit costs for your electricity depending on the time of the day. A higher unit cost will be charged during the day, while a lower unit cost will be charged throughout the night. These meters are best for businesses that use most of their electricity between midnight and 8am, as you’ll be getting a cheap deal.
Evening and weekend meter. With an evening and weekend meter, you’ll be charged more for using electricity during the day than you will be in the evenings and at weekends. This meter is appropriate for businesses that use most of their electricity in the evenings and at weekends.
Evening, weekend and night meter. As its name suggests, an evening, weekend and night meter has 3 different unit costs for electricity. Electricity used during peak hours of the day will cost the most, while electricity used at night will cost the least. Using electricity during the evening and at weekends will cost you slightly less than during the day. This meter is ideal for businesses who use most of their electricity on the weekends and at night.
These are the most common types of business electricity meters provided by energy suppliers in the UK. You will find that other types of electricity meters are available, such as seasonal time of day meters, maximum demand meters and half hourly meters. Obviously, these work slightly differently to the ones mentioned above.
To make life easier, there is only one type of standard gas meter for businesses (hooray!). These meters only charge you a single unit cost for each kWh of gas your business uses, meaning you’ll pay the same amount for your gas regardless of the time or day of the week.
Expert Picks: The Best Business Energy Suppliers
With so many energy suppliers now competing for business, choosing which to use for your gas and electricity can seem like a daunting task. We’ve made it easier for you by reviewing over 50 business energy suppliers – both big and small – to bring you a rundown of the ones that we think offer the most value to businesses. You can see the results in the table below:
Gas or Electricity
Prices 20% lower than other suppliers
★ ★ ★ ★ ★
Deliver excellent customer service
★ ★ ★ ★ ★
No exit fees or harsh penalties
★ ★ ★ ★ ★
Offer smart meters for accurate billing
★ ★ ★ ★ ★
Clear billing and payment options
★ ★ ★ ★ ★
Fixed, Flexible, Green
Prices 35% cheaper than larger suppliers
★ ★ ★ ★ ★
Account management online and via an app
★ ★ ★ ★ ★
Accurate and simple bills
★ ★ ★ ★ ★
When deciding which energy supplier is suitable for your business, you must review your energy needs and what you want from of a supplier. Without doing this properly, you’ll risk doing business with a supplier that isn’t quite right for your business. Some things to think about are:
• What type of contract do you want?
• Is there a particular type of energy meter you need?
• Are you just looking for a cheap price?
• Is good customer service important to you?
How do You Switch Energy Suppliers?
Switching energy suppliers is a lot simpler than most business owners think. All you have to do is sign up with a new supplier up to 30 days before your contract ends with your current supplier, and your new supplier will take care of all the behind-the-scenes switching stuff for you. Remember, failure to switch before the last 30 days of your contract means that you’ll probably be placed onto an expensive rollover contract.
To get the full lowdown on the leading energy companies and how to switch, read our guide on business energy suppliers.
Generating Your Own Business Energy
Have you ever thought about generating your own energy from renewable technology? From offices to manufacturing plants, on-site energy production is becoming an increasingly popular venture amongst business owners. A recent study by the Federation of Small Businesses (FSB) found that more than 1 in 10 small companies now generate their own power, and it’s something that you should consider doing.
Solar panels are the most popular type of renewable technology in the UK. These clever pieces of engineering can either be bolted onto your roof or mounted onto the ground, and convert sunlight into valuable electricity that can be used to power your business.
Investing in solar panels can have many benefits, the main one being that your business can benefit from the Feed-in Tariff (FiT). This government-backed scheme essentially pays you for generating energy from renewable technology (sort of like a reward). You’ll be paid not only for every kWh of electricity that you produce, but also for every kWh of electricity that you don’t use and sell back to the National Grid. You’ll receive these payments from the government for 20 years, meaning you’ll earn a healthy Return on Investment (ROI).
Other benefits include:
✔ Cost. The cost of solar panels has plummeted in recent years, meaning prices for a commercial solar system start from just £8,000.
✔ Energy bill savings. As your business is producing its own electricity, you’ll need to buy less from your energy supplier. Most businesses can expect to save up to 50% on their energy bills by installing solar panels.
✔ Low maintenance. Solar panels are extremely reliable and easy to look after, only requiring a quick clean every now and then.
✔ Eco-friendly. Because solar panels produce electricity from a sustainable and ‘clean’ source, they have absolutely no impact on the environment. You can therefore massively reduce your business’ carbon footprint.
To get more information about solar panels for your business, visit our commercial solar panels page.
Top 10 Business Energy Saving Tips
Businesses use a lot of energy, and finding ways to reduce the amount of energy you use can go a long way in cutting your business’ expenditure. But the benefits don’t stop there. Going ‘green’ by being more mindful about your energy consumption can also greatly improve your business’ reputation by showing the community that you are environmentally responsible.
Need convincing? A survey by the Economist Intelligence Unit of large global corporations found that 83% of businesses made major cost savings from being more energy efficient, while 54% said it also enhanced their brand image. So finding ways to save energy in the workplace can really pay off!
Here is a rundown of our top tips for reducing your business’ energy usage:
Have an energy audit done. An energy audit lets you know exactly how much energy you’re using and where you’re using it. This will enable you to identify areas of your business where you can save on energy. You can conduct an energy audit yourself or hire a professional to do it – many business energy suppliers will carry one out for you free of charge.
Install a smart meter. A smart meter allows you to track your energy consumption in real time so you can see exactly what you’re spending and when, in pounds and pence. Like an energy audit, this will help you to find where your business can cut its energy usage.
Switch to CFL or LED bulbs. Around 40% of a business’ energy is used for lighting, so changing to energy-efficient light bulbs is an easy way to save on electricity. Compact fluorescent bulbs (CFLs) and light-emitting diodes (LEDs) use up to 70% less energy and last 10 times longer than traditional incandescent bulbs.
Fit movement sensors to your lights. Once you’ve switched to energy-efficient light bulbs, consider fitting motion sensors to your lights. These will automatically turn off your lighting when an area of your business is not in use. This saves you and your staff the hassle of remembering to switch lights off, and cuts your energy consumption.
Use your heating and cooling system sparingly. Make sure you know how to properly use your heating and cooling systems. Set the temperature controls to match the outside weather conditions, and only have them switched on when they absolutely need to be. After all, there’s no point heating your office in the evenings when everyone has left by 5.
Improve your insulation. About 60% of heat from a building is lost through poor insulation, so making sure that your walls, flooring and roof are properly insulated will cut your energy consumption. Draught-proofing your business premises is a also a sure-fire way to prevent your staff from turning up the heating unnecessarily.
Upgrade to energy-efficient equipment. Replacing all of your old and outdated equipment – boilers, fridges, ovens – with new energy-efficient alternatives will save you heaps of energy. Although more expensive, try to invest in items with an Energy Performance Certificate (EPC) rating of A or better to really see the benefits.
Turn off equipment when it’s not in use. Turning off computers, vending machines, cash registers, microwaves – basically anything that is electrical – when it’s not in use (e.g. at night) can help your business to save a lot of energy. Always avoid putting equipment on standby, as it will still eat up valuable energy.
Produce your own energy. As we’ve already said, you should consider generating your own energy by installing solar panels onto your business premises. Although a large upfront cost, renewable technology has a great ROI and it can reduce your energy bills by up to 50%.
Encourage your staff to save energy. If your employees aren’t on board, you are going to struggle to reduce your energy use. Make sure that they are aware of your mission to save energy and why it is so important. You could create incentives to motivate employees to think of energy-saving ideas, such as small monetary rewards or staff socials.