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Unlocking Cost Savings: A Guide to Business Gas and Electricity Rates

Navigating the world of business energy can seem a daunting task. You may think you need to stick with the same supplier for both your business electricity and gas, but that's not the case. You have the freedom to choose, and sometimes, splitting your suppliers could even bag you a better deal.

Your business size and electricity consumption play a significant role in determining your business electricity rates. They could be calculated on a fixed or variable rate tariff, and are based on a unit rate per kWh. Most businesses are charged VAT at 20% for business gas and electricity, but you might be eligible for the lower domestic VAT rate of 5%, depending on your business type and energy usage.

It's also worth noting that business energy suppliers don't offer dual fuel tariffs. You'll need to agree separate deals for both types of energy, which could open up a world of opportunities for cost savings and greener energy choices.

Key Takeaways

  • Business size and electricity consumption directly impact your business electricity rates. These could be on a fixed or variable rate tariff and are charged on a unit rate per kWh.

  • Most businesses are charged VAT at 20% for business gas and electricity. However, some may be eligible for a reduced 5% VAT rate based on their business type and energy usage.

  • Business energy suppliers do not offer dual fuel tariffs, therefore separate agreements are needed for gas and electricity. This could lead to potential savings through competitive deals and greener energy options.

  • Utilising bespoke energy comparisons from business energy experts can help find the best-suited supplier for your business. This process often only needs your business postcode and makes efficient use of smart industry data.

  • Toward green energy, some suppliers like Dong Energy offer 100% renewable electricity at no extra cost, leading the offshore wind production market in the UK.

  • It's important to stay vigilant since energy rates can change over time and your business energy needs might also evolve. Regularly reviewing your energy contract ensures you continually benefit from the best deals.

Understanding Business Gas and Electricity

In your quest to find the ideal business energy supplier, you're not alone. A bespoke comparison from energy experts can be an effective tool to find the right one for your business. The experts scrutinise both large and small suppliers to uncover the ones that suit your business needs the best. After all, it's about keeping your business costs low without affecting the quality of your products or services, isn’t it?

Here's a tip to get started - don't worry, it's super simple! You'll only need your postcode to begin an energy comparison. Utilising smart industry data, this process cuts down the time taken to compare deals and makes it more efficient.

But let’s delve into the nitty-gritty, the estimated costs for gas and electricity based on the size of your business. This would give you a rough estimate of what you could be paying.

Business Size

Estimated Annual Gas Bill (based on usage)

Estimated Annual Electricity Bill (based on usage)

Micro Business

£1,013 (10,000kWh)

£2,895 (10,000kWh)

Small Business

£2,046 (22,500kWh)

£6,062 (22,500kWh)

Medium Business

£4,231 (47,500kWh)

£12,636 (47,500kWh)

Large Business

£5,663 (65,000kWh)

£14,770 (55,000kWh)

Note that both gas and electricity contracts are available to businesses of all sizes. For instance, a UK-based brand like SSE and several others cater to a diverse range of business needs.

The Freedom to Choose Your Suppliers

Cutting through the world of business energy can often feel like navigating a maze. But remember, you're in control. You've got the freedom to cherry-pick your suppliers for both gas and electricity. Who says you can't have your proverbial cake and eat it, too?

It's not just about the freedom though. There's a certain advantage to be found in this, too. By splitting up your suppliers, you could potentially pit them against each other. Let them compete over your business - because ultimately, it could mean more favourable deals for you.

Know this. In the sphere of business energy, single-source fuel tariffs aren't common. When it comes to gas and electricity, you'll likely have to negotiate separate deals for each. But fear not, this could potentially be your entry point to cost savings and greener energy options.

Now onto rates. They're another aspect you've got to consider when choosing suppliers. Factors such as the size of your business and your rate of consumption play a significant role here. They determine whether you'll be on a fixed or variable tariff - each having its own merits and shortcomings.

Also, when it comes to VAT, there are possibilities for savings. Most businesses are usually charged at 20% for their gas and electricity. But, depending on your business type and energy usage, you could be eligible for the lower domestic VAT rate of 5% - a significant saving, wouldn't you agree?

And once you've found the right supplier, try not to be complacent. Stay vigilant. Energy rates can fluidly change over time, and your requirements might evolve as your business expands. Accordingly, it’s recommended that you review your energy supply contract periodically to ensure you're getting the best deal.

Factors Affecting Business Electricity Rates

When you're shopping for business energy solutions, you'll quickly realize that electricity rates can vary greatly. Several factors contribute to these price differences. Business sizeenergy consumption, and the type of tariff chosen are some key influences on the rates you're offered.

Business size and energy consumption go hand in hand. Typically, the bigger your business, the more electricity you'll consume. Energy suppliers, such as Dong Energy and SSE, often customise rates based on your consumption levels. If you're a heavier user, you may be able to negotiate lower rates, especially with a long term contract.

Different energy suppliers offer a variety of fixed and variable rate tariffs to cater to businesses of different sizes and consumption levels. SSE, for instance, offers fixed price tariffs for up to four years for both gas and electricity. Dong Energy likewise offers both fixed and variable tariffs. By carefully choosing the right tariff for your business, you could potentially save a lot.

Moreover, if you're keen on reducing your carbon footprint, green energy could be a great option. Suppliers like Dong Energy and Ecotricity offer 100% renewable electricity. Interestingly, Dong provides this at no extra cost, controlling 44% of the UK's offshore wind production.

As a business owner, you also have the opportunity to explore energy sources both from the UK and Europe. Such diversity of supply could offer more competitive rates and help ensure a stable supply.

Finally, don't forget that most businesses are charged VAT at 20% for business gas and electricity. Still, depending on your business type and energy usage, you might be eligible for the lower domestic VAT rate of 5%. It's always worth checking which rate you qualify for.

Evidently, there's power in knowledge. Understanding these rate-affecting factors can position you to better handle your negotiation with suppliers, leading to potential cost savings. Therefore, staying vigilant and periodically reviewing your energy contracts is paramount. It's your doorway to not just a lighter bill, but also more sustainable business operations, adding value to your enterprise in the long run.

Calculating Business Electricity Rates

First, you need to know that you're not bound by any rules to use the same supplier for both your business electricity and gas supply. It's a common misconception, but being aware of this could arm you with extra bargaining power when negotiating your energy prices.

Let's break down business electricity rates. One key element influencing your business electricity prices is the size of your business, combined with its electricity consumption. It's quite logical: higher consumption means you'll need a bigger supply, which could potentially result in lower unit prices. Don't forget, though, that most business customers pay a higher rate of VAT.

Your business size and energy use will determine if your electricity costs are calculated on a fixed or variable rate tariff. These tariffs operate a unit rate per kWh basis, essentially charging for each unit of energy you use.

In terms of VAT, it's essential to understand that most businesses are levied at the standard 20%. However, depending on the type of business you own and how you use energy, you might be eligible for the lower domestic VAT rate of 5%. It's worth checking into the criteria for this - small savings can add up significantly over time.

On another note, whether you're a giant corporation or a microbusiness with less than ten employees, there's an energy contract suitable for your business size. Suppliers understand the diverseness of businesses, so products like fixed price tariffs for up to four years for gas and electricity, and variable rate contracts with direct access to energy trading teams are available. And if you're concerned about the environment, it's prudent to note that there are suppliers with a strong focus on green energy.

This reflects a shift in the business world: a greater lean towards environmental consciousness. For instance, there's Ecotricity, a company powering over 10,000 businesses with green energy. In 2010, they even pioneered a new method of producing green gas, underscoring their commitment to sustainability.

Thus, as you can see, there are multiple factors and options to consider when looking at business electricity rates. The critical thing is to stay informed and vigilant, periodically reviewing your energy contracts to ensure cost savings and sustainable operations. Your business isn't static, and neither should your energy strategy be.

VAT Rates for Business Gas and Electricity

When it comes to business gas and electricity, you should bear in mind that VAT rates aren't the same as residential bills. Most businesses get hit with a VAT rate of 20%. This is a step up from the mere 5% that domestic energy consumers pay. But it's not all bad news. Some businesses might qualify for a lower VAT rate. Yes, it's the same privileged 5% rate that domestic consumers enjoy.

The rules to lower rates, fortunately, aren't too complicated. Firstly, if a minimum of 60% of your business's energy consumption is used for domestic purposes, the 5% rate is on the cards. That's where careful energy use can really pay dividends. Secondly, if you use less than 33 kWh of electricity each day, or 1000 kWh each month, you fall into the same lucky bracket. Finally, if you're a charity or non-profit organisation. You've guessed it - the 5% rate is up for grabs again!

A markdown table summarising these criteria:

Criteria for Lower VAT Rate

VAT Rate

60% energy used for domestic purposes


Use less than 33 kWh daily or 1000 kWh monthly


Charity or non-profit organisation


Aside from VAT, there's also the Climate Change Levy (CCL) to keep an eye on. If your business uses a high amount of electricity, you may be on the hook for this additional cost. However, that's a topic for another time.

Now you've grabbed a clearer picture of potential VAT charges for your business gas and electricity. The important takeaway is that it's not set in stone. With careful energy management and by meeting specific criteria, it's possible to secure a VAT reduction, tipping the scales to your advantage.

Separate Deals for Gas and Electricity

It's essential to understand that business energy suppliers don't offer dual fuel tariffs similar to the domestic energy plans. Instead, your business energy needs are bifurcated into business gas and business electricity, which require separate deals. This implies that you have to invest more time either seeking quotes or consulting experts to find the ideal individual gas and electricity plans for your business.

Unlike domestic energy contracts, which usually last for 12 months, business contracts can be provided for an extended period. They can even last up to five years, possibly more. However, you need to be cautious, as business energy contracts are priced on a per unit basis, with both gas and electricity contracted separately. These contracts typically don't offer a cooling off period, indicating once locked in a deal, you can only switch suppliers during the switching window. This window usually falls around one to six months from the end of your contract.

Adjusting to these business-specific realities of energy deals proves challenging for many, given other pressing business demands. So, should the process of acquiring competitive energy deals consume your valuable time? Certainly not. A resourceful solution like a consultation with energy experts can equip your business with competitive tariffs suitable to your needs and budget.

Although it may seem a bit complicated at first, understanding this distinction between residential and business energy contracts can aid your enterprise with substantial savings in the long run. Consider all the factors from various tariffs to contract length before plunging into a deal. Always remember, staying informed about your contracts and regularly reviewing them can pave the way for cost savings and sustainable business operations.

Opportunities for Cost Savings and Greener Energy Choices

Exploring various industry suppliers such as Dong Energy and SSE will broaden your energy choices and allow you to find more economical rates. It's crucial to understand these energy suppliers are more than capable of furnishing your business's energy demands whilst also offering green energy options to help you lessen your carbon footprint.

Dong Energy, one of the top 10 business energy suppliers, leads in offshore wind power, controlling 44% of the UK’s entire offshore wind production. They also have a firm standing in commercial and industrial markets, presenting a variety of fixed and variable rate tariffs for businesses. Worth noting that they provide both UK and European energy sources and offer 100% renewable electricity at no additional cost.

On the other hand, SSE shines as the largest generator of renewable energy and the second largest supplier of natural gas and electricity in the UK, with around 500,000 business customers. They present cost saving opportunities with their SSE Choice tariff, allowing you to fix your wholesale energy prices for up to five years, ensuring stable costs regardless of market changes. If your business is a corporation or a public sector organisation with high energy usage (greater than 1MW) or you spend around £1m per year, the SSE Shaping tariff offers accessibility to live market prices. This can provide opportunities for you to benefit from fluctuating market conditions. Moreover, SSE Cash Out might be an interesting offer as it allows you to earn extra revenue by selling back surplus energy generated at your site.

In the pursuit of cost savings and sustainable operations, bear in mind most businesses are charged VAT at 20% for business gas and electricity. However, you might be eligible for the lower domestic VAT rate of 5%, depending on your business type and energy usage. Keep yourself updated and revisit your energy contracts regularly to ensure you aren't missing any opportunities for savings and sustainability.


You've seen how your business size, energy consumption, and chosen tariff can influence your electricity rates. It's crucial to keep these factors in mind and review your energy contracts periodically to ensure you're saving costs and operating sustainably. 

If you're keen on reducing your carbon footprint, options like Dong Energy and Ecotricity provide 100% renewable electricity. Remember, you're not limited to UK suppliers; exploring European energy sources could offer competitive rates and stable supplies. Dong Energy, British Gas Business and SSE are just examples of the numerous suppliers available, each with unique tariffs and potential savings. By staying informed and periodically reviewing your contracts, you can secure cost savings, sustainable operations, and even a VAT reduction on your business gas and electricity. So, don't hesitate - start exploring your options today.

Frequently Asked Questions

What factors affect business electricity rates?

Business electricity rates are influenced by several factors including the size of the business, energy consumption, and the type of tariff chosen. Both regional suppliers, such as Dong Energy and SSE, and European suppliers can offer competitive rates and stability.

What is the benefit of choosing green energy providers for businesses?

Green energy providers like Dong Energy and Ecotricity supply 100% renewable electricity which aids businesses in reducing their carbon footprint. Moreover, Dong Energy provisions these renewable options without any additional cost.

Does reviewing energy contracts periodically help in cost-saving?

Yes, regular review of energy contracts is crucial to ensure cost optimisation and sustainable functions. It also opens the possibility to avail of a VAT reduction for business gas and electricity, thus, resulting in significant savings.

Are there provider-specific benefits to switching energy contracts?

Yes, providers like SSE offer cost-saving opportunities with their SSE Choice tariff and the ability to earn additional revenue through the SSE Cash Out offer, making it worth the switch.

Can we source energy from both the UK and Europe?

Yes, businesses have the opportunity to explore a variety of energy sources from both the UK and Europe, ensuring a more stable supply and potentially more competitive rates.

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