Business energy

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% and 0% for electricity until 31 March 2027

• Businesses pay a Climate Change Levy on their electricity bills, which is currently £0.801p/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.

The Climate Change Levy (CCL) 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.

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

• 89% for gas.

Some businesses, such as charities and businesses that don't use a lot of energy, are exempt from paying the CCL.

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.

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.

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’.

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.

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.

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.

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 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.