A Guide to Small Business Gas and Electricity

If you run a small business, it’s important to keep your operating costs in check and make sure you aren’t paying over the odds for anything. This includes gas and electricity, and if your company has been on the same old energy tariff for a while, there’s a good chance you could make substantial savings by switching to a new commercial energy supplier.

In this guide, we’ll tell you how commercial energy prices for small businesses are calculated, how to get the best deals for your company, and how a business energy broker can help you find the right plan.

Plus in our FAQ section, we reveal the answers to the questions we hear most often from small business owners who are looking to switch energy providers.

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How much does gas and electricity for a small business cost?

An energy supplier will class your company as a small business if you employ less than 50 people and have a turnover of less than £10 million a year. The average electricity cost for a small business ranges from 14p to 17p per kWh unit of energy used, with a daily standing charge of around 25-35p for the duration of the contract. This would be enough to power a small office, shop or factory, to put this figure into context.

Average small business gas prices, meanwhile, are around 3-4.5p per kWh unit plus a daily standing charge of approximately 22p. These numbers are only estimates, though. Take a look at the tables below for a rough idea of how the average costs can vary.

Approximate energy cost and usage for a small business

Energy Type Average Yearly Consumption Average Cost Daily Standing Charge Average Yearly Cost
Electricity 15,000-25,000 kWh 14.3-17.1p per kWh 23-35p £2,367 – £3,660
Gas 15,000-30,000 kWh 3-5p per kWh 19-25p £820 – £1,458

The table above is purely for example purposes and was accurate at the time of writing (November 2020). For up-to-date, bespoke figures, make an enquiry to speak to a broker.

The cost can also differ if your company has nine employees or fewer and a turnover of under £2 million.

This would make it a micro-business, and you can see examples of how the price of gas and electricity can vary in the table below…

Approximate energy cost and usage for a micro business

Energy Type Average Yearly Consumption Average Cost Daily Standing Charge Average Yearly Cost
Electricity 5,000-15,000 kWh 14.4-15.9p per kWh 23-29p £900 – £2,244
Gas 5,000-15,000 kWh 5-5.1p per kWh 19-25p £400 – £820

The table above is purely for example purposes and was accurate at the time of writing (November 2020). For up-to-date, bespoke figures, make an enquiry to speak to a broker.

The exact price you’ll pay for your small business’ energy will be calculated by your supplier on a bespoke basis once you’ve provided them with specific information about your firm’s needs and circumstances.

They will work out what rates you qualify for based on these factors…

  • Your company’s energy consumption
  • The firm’s credit rating (a history of bad credit might mean higher rates)
  • The size of your small business (having nine employers or fewer could mean you qualify for a micro business deal)
  • The postcode you’re based in
  • How the business trades (sole trader, limited company etc)
  • The type of energy meter you use (NHH, HH, NDM, Daily Meter, AMR/Smart Meter etc)

Moreover, the actual amount you’ll pay will depend on the type of contract you take out. They can be broadly split into four types: rollover, fixed term, deemed rates and flexible.

You can read about the differences between them in our comprehensive guide to business energy.


Can I switch my gas and electricity suppliers?

Yes, small businesses are free to switch to another energy supplier, and doing so can help you save money. Before you look into this, check the terms of your existing deal to find out when you’re due to enter the end of your contract window. This is often six months before it ends.

Small businesses would usually need to have entered this period before they can switch to another energy provider, but micro-businesses can sever their contract at any time.

If you’re thinking of switching, speaking to a commercial energy expert who specialises in small businesses beforehand is highly recommended. Luckily we work with brokers who have this expertise, and they will search the entire market on your behalf and track down a bespoke deal for your company, tailored to its energy needs, budget and circumstances.

Not only can a business energy broker save you the legwork of finding the best tariff for your business, if you use our free broker-matching service, you’ll be paired with the right energy expert, one who has a strong track record when it comes to saving small businesses time and money.

Read on to find out how to switch and how to make sure you get the best deal.


How to find the best gas and electricity supplier for your small business

Using a commercial energy broker is the best way to find the right gas and electricity supplier for your small business. That way, you will have access to all of the deals that your company qualifies for and the optimum one will be picked out for you, without you lifting a finger.

Through our free broker-matching service, you can be introduced to a commercial energy expert who specialises in small businesses and knows exactly which gas and electricity suppliers understand their needs and offer the most favourable rates.

Here’s how to find your perfect energy provider in three easy steps…

  • Make an enquiry with us so we can match you with a business energy broker who specialises in small business customers
  • Your broker will carry out a free, no-obligation business health check to find out whether you could save money by switching to a new energy provider
  • Your broker will search the entire market for the best available quote, based on your small business’ energy needs, budget and circumstances

How to compare gas and electricity prices

There are countless quote generation websites and online rates tables that small business customers can use to get a rough idea of the deals on offer, but this is not the best way to compare policies. These tables and tools rarely cover the whole market, often give prominent placement to sponsored deals and won’t be bespoke to you or your company.

With this in mind, speaking to a commercial energy broker instead of doing the legwork yourself is recommended. That way, you will get a full whole-of-market comparison of gas and electricity deals for small business customers as well as bespoke advice from an expert who knows the market.


FAQs

Got a question about small business gas and electricity providers that we haven’t covered so far? Read on to find out whether we’ve answered it here in our FAQ section

What is the average gas and electricity consumption for a small business?

Anywhere between 15,000 and 25,000 kWh per year would be average for a small business’ electricity consumption, while a micro business could use between 5,000 and 15,000.

For gas consumption, between 15,000 and 30,000 kWh per year would be average for a small business, or between 5,000 and 15,000 for a micro business.

What is the average gas and electricity bill for a small business?

The average cost of electricity for a small business is between £2,367 and £3,660, which works out at £197.25-305 per month. For micro businesses, you’d be looking at £900 to £2,244 a year.

Gas, meanwhile, costs most small businesses in the UK between £820 and £1,458 a year, or between £400 and £820 for a micro business.

What is the VAT rate for small business gas and electricity?

The VAT rate for commercial energy is usually 20% but many small businesses benefit from a reduced rate of 5% since they use less than 33 kilowatt hours of electricity or less than 145kw hours of gas per day.

Who is the cheapest supplier of gas and electricity for a small business?

This is something of a rhetorical question as there’s no one-size-fits-all answer. No energy supplier in the business will offer you rates solely on the fact you’re a small business. They will take many other factors into consideration when tailoring your quote.

They include…

  • Energy consumption
  • Postcode
  • Credit report
  • How the business trades
  • The type of energy meter

So, the cheapest energy supplier will ultimately be the one whose criteria you fit the closest. For instance, some providers won’t offer the best rates or tariffs to firm’s with a bad credit history while others have a higher appetite for risk.

One thing to keep in mind is that you’re unlikely to find the supplier offering the very best deal you qualify for by venturing into the market without specialist advice.

What’s the difference between small business and micro business energy?

If your firm has nine employees or fewer, uses less than 100,000 kWh of electricity and 293,000 kWh of gas per year, or has an annual turnover of less than £2 million, it could be classed as a micro business, as far as energy suppliers are concerned.

If your company falls into the micro business category, you might be entitled to extra support from your energy supplier and have the right to terminate your contract at any time.

Do I need a small business gas and electric supplier if I run my company from home?

You would only need to be on a commercial energy tariff if a significant percentage of your household’s energy usage is for business purposes. Most supplies will tell you this is 50% or above.


Get a gas and electricity quote for your small business today

If you’re looking for an energy quote for a small business, your best bet is to speak to a commercial energy broker with expertise working on behalf of companies like yours. They will know exactly which gas and electricity providers to approach to help you secure the best available deal.

Not all energy advisors have the same specialist knowledge, but if you use our free broker-matching service, we’ll personally introduce you to the right expert for your company’s energy needs, budget and personal circumstances.

Call 0808 189 0463 or make an enquiry and we’ll pair you with a commercial energy broker for a free, no-obligation business health check, which will tell you exactly how much your small business could save on its utility bills.

We'll match you with your perfect financial advisor

Save time and money with an expert who specialises in cases like yours

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Save time & money with an expert who specialises in cases like yours.

We’ll match you with your perfect financial advisor – for free.