If you own or operate a business and want to maximise profits, you’ll want to keep tight control on your outgoings, not least when it comes to your business gas and electric usage. But not being aware of the typical prices across the market can lead you to make ill-informed decisions that could end up costing a lot of money in the long run, especially if you get tied into a lengthy contract with a supplier. There are a host of business gas and electricity suppliers on the market, and choosing the right one for your needs and budget can be both confusing and time-consuming.
In this blog, we’ll look at the average rates for business gas and electricity across the UK. We’ll also go through the main factors that affect these prices, so you can make a more informed decision when it comes to switching suppliers.
Average business gas and electric prices in the UK
The average prices for business gas and electricity in the UK tends to vary, not least depending on the size of your company.
As of July 2021, microbusinesses will find themselves paying an average business gas price of 3.82 pence per kilowatt-hour (kWh), while small businesses are likely to pay 2.19p per kWh. The average gas price is around 2.11p per kWh for medium companies, while large businesses can expect to pay just 1.81p per kWh on average. Very large companies with a significantly higher consumption tend to pay an average price of just 1.63p per kWh. Taking all these into account, on average, the typical business gas price is around 2.28p per kWh.
As you’d expect, the average electricity prices are higher. Microbusinesses pay around 16.74p per kWh, while small businesses pay on average 14.83p per kWh. Medium and large enterprises, on the other hand, pay around 13.68p and 12.93p per kWh, respectively. And overall, the average unit price for business electricity across all businesses is 14.40p per kWh.
You should bear in mind that the average prices won’t be the cheapest you can get. But if you find yourself paying more than these average charges, then it’s definitely time to re-assess your current supplier and consider switching to another, to benefit from large savings.
Factors affecting gas and electricity prices in the UK
Global energy market
The prime driver of the raw costs of gas and electricity in the UK is their prices on the global market – most specifically, the price of oil in dollars. Gas prices are directly affected by the rises and falls in global oil prices.
And because electricity within the UK is still primarily reliant on gas for its production, the price of electricity is inextricably linked with gas and, therefore, oil prices. Of course, the price of oil is not the only factor affecting gas and electricity prices in the UK, where gas is also acquired from other sources, such as North Sea exploration, supplies from Europe, deliveries from LNG tankers, and the country’s own stockpile of oil.
The global economy also affects domestic and business gas and electricity prices alike in the UK. For example, exchange rates of Sterling to the US Dollar and the Euro will directly affect gas and electricity pricing.
Global events can also have an indirect effect on UK gas and electric prices. For example, conflicts in the Middle East region and North Africa can have major repercussions on the production and delivery of LNG and oil. Because the Middle East and North Africa are large exporters to the UK, any constraints in these regions’ production can lead to a shortage, which in turn causes a price increase among business gas and electric suppliers.
The UK has signed up to the Kyoto agreement, which aims to lower carbon emissions. As a result, many electrical generators that previously used coal as fuel have been closed in favour of those that produce renewable and green energy. Although renewable and green energy produces fewer carbon emissions, they are generally more expensive to run. Additionally, levies have been imposed on every tonne of carbon that power companies generate, and these costs are ultimately borne by the end-users.
Some environmental factors can also be beneficial to the prices of gas and electricity. Windy weather, for instance, can result in more power being generated from wind turbines, which can cause slight price decreases.
All these factors have major and minor effects on the prices of gas and electricity on almost a daily basis, making it difficult for the average consumer to calculate the best deal when choosing a supplier. If you’re looking to reduce energy costs within your business, we are here to help. Smarter Business is a reputable broker that can assist you in finding the best electricity and gas providers in the UK for your needs, usage and budget. We will work closely with your business, conducting research and data analysis to determine the cheapest and most effective deal for you.
We have already assisted many businesses in the UK, helping them find ways to reduce usage and costs, then finding the best electricity and gas rates. We consider the unique energy requirements and needs of each business in our work and can provide you with valuable tips to help you cut down on your gas and electricity consumption without affecting your daily business operations.
If you would like to find out more about working with us, you can contact us by phone on 01444 220060. You can also contact us if you have any other questions on matters not discussed in this blog by emailing us at firstname.lastname@example.org. Alternatively, you can also use our contact form here: https://smarterbusiness.co.uk/contact-us/.
Energy Tips for Small Businesses
- Select providers that charge reasonable rates for business energy
- Choose a provider that has longer contract terms
- Calculate the value of economies of scale, as these make business petrol and energy generally cheaper
- Install a half-hourly meter to ensure more accurate estimates
- Ensure that business prices are based on a business’ type, location, contract length, payment method, and credit score
- Negotiate and tailor prices according to your business’ needs
- Find a tariff that doesn’t allow for price increases
- Consider simple ways of reducing energy consumption within your business premises
- Try switching energy suppliers
Guide to Saving Electricity in the Office
- Ensure staff wear appropriate clothing for each season
- Keep the thermostat set between 20-23 degrees Celsius
- Use an energy management system that sets a timer on the air conditioning
- Turn lights off when leaving rooms
- Program lights to turn off automatically at the end of each day
- Use LED bulbs
- Take advantage of natural daylight
- Set PCs and other equipment to hibernation/sleep mode when not in use
- Replace old equipment with those that have better energy ratings
- Ensure there’s a 10-cm gap behind the fridge to improve heat flow
- Unplug appliances when not in use
- Don’t overfill kettles with water to save on heating costs
Choosing the Right Energy Provider
- Don’t just consider the big household names
- Establish your priorities, e.g., renewable energy sources, the cheapest rates or digital tools to monitor usage
- Consider a provider’s reputation, especially business history, online accessibility, and customer service. Use past customer reviews to explore their performance
- Explore each plan offered by each provider. Determine whether your business requires either a fixed-rate or a variable-rate energy plan. Considerations could include selecting a fixed-rate plan if you are just getting a business started; or choosing a variable-rate plan if you prefer your rate to be tied up with the market price
- Consider whether a short-term or a long-term contract serves your needs best
- Book an expert business gas and electric comparison from an experienced broker
How to Make Sure You Get the Best Energy Deal
- Start thinking about switching to new deals before your existing contract ends
- Have your latest energy bill on hand when comparing deals
- Ensure that your new provider coordinates with the current provider during a switch
- Confirm whether you can get a smart meter
- Install an energy monitor
- Look for dual fuel energy tariffs
- Consider a green energy deal
- Ask a provider if you can consolidate corporate gasoline and power supply into one contract if you operate over multiple locations
- Check whether the energy supply has been disconnected when moving into new premises
FREQUENTLY ASKED QUESTIONS
How Much is a Kilowatt of Gas?
The average cost of gas per kWh across the UK is 2.28 pence, but the business gas and electric unit rates will differ based on the state of the market globally, the size of the individual business, its location, its typical usage, the supplier and the energy price plan chosen, and the length of the contract, for instance.
Is Business Gas Cheaper than Domestic?
In terms of price per unit, yes: business gas is cheaper. But other factors also push up business gas prices, including a higher rate of VAT than domestic customers; the burden of additional levies and energy regulations that domestic customers are not subject to; and factors such as longer contract terms.
How is Gas Price Calculated?
Gas price per unit is based on a variety of factors, including crude oil prices worldwide, taxes, the cost of extraction, and distribution costs. Other determiners of price include the business location; the size of the business, its premises and its consumption; and even the type of gas meter the business has. This all means there is no ‘one-price-fits-all’.
What is the Difference Between Domestic and Commercial Electricity?
Domestic and commercial electricity are similar in terms of quality, but commercial energy is needed in bulk. Because of factors such as economies of scale, energy companies can offer cheaper tariffs for business customers.
Commercial energy tariffs allow businesses to buy electricity at cheaper rates. Meanwhile, domestic electricity has a more standard approach to pricing.
What is the Unit Rate of Electricity?
Electricity is measured in kilowatt-hours, or kWh. The unit rate for electricity refers to the cost for every kWh used. The typical unit rate can vary depending on a number of factors, such as your location or preferred payment methods. The average unit rate for electricity in the UK is 14.40p per kWh.
How do I Calculate My Electricity Usage in the UK?
Say you use a 125-watt television 3 hours a day. Multiply 125w by 3 hours, and you get 375-watt hours daily.
Divide by 1,000 to convert to kilowatts, which equals 0.375 kWh/day. Multiply this by 30 days, and you’ll be charged for 11.25 kWh/month. At 10p per kWh: multiply 11.25 kWh by £0.10, and you’ll pay around £1.13 per month.