Business energy

Q: What’s the difference between domestic and business energy?

Here are the main differences between domestic and business energy: There’s no price cap on business energy – domestic energy unit rates and standing charges are capped, but there are no such protections on business energy contracts. It’s important to compare quotes and fix your business energy rates to avoid price volatility. You can only switch business energy tariffs in the switching window – unlike domestic energy tariffs which you can switch at any time (subject to any exit fees). The market works differently – domestic energy customers can pick from energy tariffs available across the market. For business energy, you’ll need to get a bespoke quote from suppliers depending on the size, type and location of your business.

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Why switch business energy supplier?

Even small price differences can lead to big savings on your company’s energy bills over the year. Here are some of the main reasons it might be worth looking for a new deal:

Cut your energy bill

Business tariffs are typically higher than residential, and prices can change often. Comparing new deals can help lower your bill and stay on an affordable tariff.

You’ve moved premises

If your business has moved, you might be on an expensive default called a ’deemed energy contract’.

You’re still with the same supplier

If you haven’t changed tariffs or suppliers in a while, you could be on an expensive out-of-contract rate.

Your business is growing

Your energy usage will change as the business grows, making crucial to get the right energy deal.

You want better service

Customer care is just as important as price. If you have an outage, a reliable supplier can resolve issues quickly and keep your business running smoothly.

You want to be more sustainable

Green tariffs could offer reduced energy rates, sustainability rewards and discounts on installing renewable equipment, such as solar panels.

Business energy tariffs explained

Business energy contracts can’t usually be terminated once they are signed and agreed, so it’s important to choose the right contract in the first place.

Fixed-term

The most popular type of energy tariff for businesses. Energy suppliers typically offer commercial customers a range of fixed-term tariffs over one to four years.

Although bills will vary depending on how much energy you use, the unit cost and standing charges remain the same for the agreed fixed term.

Variable

The rate charged per unit of energy (measured in kWh) is linked to market activity. This means what you pay for each unit of energy could change throughout your contract. These tariffs historically have been the most expensive. When prices go up, you’ll have to pay a higher rate.

However, you’ll benefit if prices start to come down. Your supplier will usually give you notice of an increase in prices.

Deemed tariff

You’ll be put on a deemed tariff if you move into new premises and start to use gas or electricity without agreeing a contract with an energy supplier.

Out-of-contract rates

You’ll be put on out-of-contract rates if you reach the end of an energy contract without switching suppliers or signing up to a new one with your current supplier.

Deemed and out-of-contract rates are usually more expensive than other contracts. This is why it’s a good idea to negotiate a new deal with your existing supplier or a new provider before your current contract expires.

Rollover tariff

With some energy contracts, if you don’t cancel or renew your contract, you’ll be switched to terms set out in a pre-fixed rollover contract. These automatically tie you into a new deal with your existing supplier.

They’re not as common as they once were. But it’s always a good idea to keep an eye out for when your contract ends and start negotiations in a timely way.

Flex-approach tariff

This allows you to bulk-buy your energy in advance, so when it comes to using it, you already know how much you’ve paid.

Bulk-buying this way also means you can benefit from wholesale prices. It does have a downside if you find yourself out of contract when energy prices are high.

Pass-through tariff

This allows you to split your bill between the fixed wholesale price and other charges, like the National Grid and Transmission Network Use of System (TNUoS), which can vary over the year.

The idea is that the variable charges passed on to you, the business customer, may increase over time and offset the cheaper fixed wholesale price that you’ve been given.

Blend and extend contracts

Some, but not all, providers are willing to renegotiate with small businesses who fixed their tariffs during market peak in 2022.

This allows businesses to blend their existing contract at a higher price with a new contract that better reflects current prices. In return, you extend the length of the contract with the supplier.

Things to consider when comparing deals

How tariffs work

How prices are calculated

Time of day can make a difference

Compare annual costs

Renewal rules

Understand your tariff options

Before comparing deals, you should first decide which type of energy tariff would suit your business best. There are many options, which include:

Fixed-term – ideal if you want predictable bills
Variable-rate – prices go up and down with the price cap
Green – can be more expensive than standard tariffs, but may be suitable if you run a sustainable business and want to cut your carbon footprint
Flex approach – bulk buy your energy in advance.

Business gas and electricity prices

Below are the average business energy prices including the Climate Change Levy (CCL), based on the latest government data, as of March 2026:

Energy type	Average price per kWh
Gas	5.17p
Electricity	24.14p

Both business gas and electricity prices decreased by over 6% year on year.

But your energy bills will depend on various factors, including your business size and sector, the tariff you’re on and the amount of energy you use.

How can I save on my business energy bill?

Compare deals and switch

Make your business more energy-efficient

Introduce energy-saving workplace habits

Run an energy audit

Install a smart meter

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What our expert says...

“With wholesale energy prices still fluctuating, it’s more important than ever to make sure you don’t slip onto volatile out-of-contract rates. When the time comes for you to switch, we can help you make a business energy comparison with the help of our trusted partner and industry experts Bionic.”

Dan Tremain, Energy and business energy expert

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Compare business energy

^Exclusive Love2Shop voucher offer

Receive a £100 Love2Shop voucher for each eligible meter when you switch to Scottish Power through Bionic, regardless of energy consumption
Offer available with Compare the Market from 12 June to 11:59pm on 28 August 2026
Available to new Scottish Power customers only
Valid on dual fuel and single electricity business energy contracts only
The voucher will be sent by Scottish Power via email as a voucher reward code to the eligible customer’s registered email address within 30 days from the date in which the new business energy contract is signed
Each voucher is valid for 24 months from the date of issue
Full terms and conditions apply.

FAQs

Why is business electricity so expensive?

There are a few reasons why business electricity is more expensive than domestic:

Most businesses are charged the standard VAT rate of 20% for their electricity, while domestic customers pay 5%
Businesses pay a climate change levy on their electricity bills, which is currently £0.775p/kWh
Unlike domestic customers, out-of-contract business rates aren’t protected by the Energy Price Cap. Deemed contract rates for business electricity are typically much higher than deemed domestic rates.

What is the Climate Change Levy (CCL)?

The Climate Change Levy is an environmental tax charged on the energy that businesses use. Its aim is to encourage businesses to be as energy-efficient as possible and reduce their carbon emissions. You may be excluded from paying CCL if your business energy usage falls below the minimum limit.

The current CCL rate from 1 April 2026 is £0.00801 per kWh of gas and electricity. Businesses in eligible energy-intensive sectors can get a reduced CCL rate of:

92% for electricity
86% for gas.

What’s the difference between domestic and business energy?

Here are the main differences between domestic and business energy:

There’s no price cap on business energy – domestic energy unit rates and standing charges are capped, but there are no such protections on business energy contracts. It’s important to compare quotes and fix your business energy rates to avoid price volatility.
You can only switch business energy tariffs in the switching window – unlike domestic energy tariffs which you can switch at any time (subject to any exit fees).
The market works differently – domestic energy customers can pick from energy tariffs available across the market. For business energy, you’ll need to get a bespoke quote from suppliers depending on the size, type and location of your business.

Are dual fuel business energy tariffs available?

No, business energy suppliers don’t offer dual fuel tariffs. Instead, business energy is split between business gas and business electricity. Because of this, you’ll need to agree separate deals for both types of energy. But you can still get both fuels from the same supplier. That’s where we can help you.

How do business energy contracts work?

While domestic energy contracts usually last for 12 months, business energy contracts can last anywhere up to five years, maybe longer. Business energy is also priced on a per unit basis, with both gas and electricity being contracted separately.

With a business energy contract, it’s industry standard to not offer a cooling-off period, and you won’t be able to switch suppliers until you enter the ‘switching window’.

How are commercial energy plans calculated?

The costs of a commercial energy plan are calculated using several factors, including:

Your business’s energy usage – naturally, using more energy will cost more
The size and type of business – for example, larger businesses tend to be charged less per unit because they will use more energy overall
Your business’s location – energy is priced differently among regions
Contract length – locking your business into a longer business energy contract may reward you with a cheaper per unit price. Just keep in mind that locking yourself into a longer term commitment means you won’t be able to switch to a better deal if prices fall.

Will my business energy be disrupted when I switch?

There won’t be any disruptions to your supply when you switch commercial energy suppliers. Your new energy supplier will liaise with your old one and make all the arrangements for the switch over.

As with domestic switches, you’ll be expected to take an up-to-date meter reading and pay off any outstanding bills.

What should I do if my business is moving premises?

If your business is moving premises, you’ll need to tell your current supplier:

Where you’re moving – they’ll need your new business address
When you’re moving – they’ll need the date you’re leaving your current business address, as well as the date you move into your new premises
Provide meter readings – both when you leave your old address and when you arrive at the new one.

You should ideally give your supplier a month’s notice of your move. Just don’t leave it too late. If you end up cancelling your old supplier without arranging a new one, you’ll likely be put on a more expensive deemed rate.

How do I find out when my energy contract ends?

You should be able to find out when your energy contract ends by looking at a recent energy bill. If you can’t find the end date or it’s not clear, you should get in touch with your business energy supplier.

It’s important to know when your energy contract ends. It gives you time to start looking for a new tariff before you roll onto a more expensive variable rate.

How long does it take to switch?

How long it takes to switch business energy suppliers can vary between businesses, but according to Ofgem, it should take up to five working days.

But remember, if you’re on a fixed contract, you won’t be switched to your new supplier until this current contract has ended.

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