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Business electricity bills can be astronomical, but it doesn’t have to be that way. Here at Smarter Business, we live up to our name by helping you to find the best prices* for your utilities. That allows you to use those savings to grow your business further instead.

What costs go towards business electricity pricing?

when to switch business electricity suppliers

Various costs contribute towards the final cost of your business electricity. The two main charges that you’ll see on your energy bills are the unit cost and the standing charge. The unit cost is the amount charged for each kilowatt hour (kWh) of electricity used, while the standing charge is a set rate that’s charged each day for the supply itself, no matter how much energy your business uses.

But how are these rates determined? A number of factors contribute to the total cost, including wholesale electricity costs, VAT, transportation costs, and environmental costs, such as the Climate Change Levy (CCL).

All of the following contribute towards business electricity pricing:

  • Wholesale costs
  • VAT (20% for businesses)
  • Supply distribution costs
  • Environmental taxes (CCL
  • Operating costs

How much are business electricity rates currently?

Business electricity prices will also vary slightly depending on the size of your business, which itself is determined by the amount of electricity your business uses each year.

Here are the current average rates of business electricity as of February 2024:

Business Size

Average Unit Cost of Electricity

Average Electricity Standing Charge

Micro Businesses (up to 5,000kWh per  year)25.1p69.4p
Small Businesses (5,000 – 15,000 kWh per year)25p78.9p
Medium Businesses (15,000 – 25,000 kWh per year)25.8p78.9p
Large Businesses (25,000 – 50,000 kWh per year)25p116.2p
Very Large Businesses (50,000+ kWh per year)24.6p116.2p
why is business electricity important

So, what does this mean for your business? How much should you be paying for electricity each year? This will, of course, depend on how much electricity you actually consume. Based on typical electricity usage for each business size, this is how much you should expect to be paying, on average, each year:

  • Micro Businesses: £1,506
  • Small Businesses: £4,041
  • Medium Businesses: £6,741
  • Large Businesses: £12,922
  • Very Large Businesses: £25,019

You should also note that business electricity rates can fluctuate quite a lot from month to month, as they are largely determined by highly volatile wholesale energy costs. While business electricity prices are currently falling and are significantly lower in 2024 than they were in 2023, there is no guarantee that this downward trend will continue. For peace of mind, it’s advisable to get a fixed energy contract, which will lock in your unit rate and standing charge for the entirety of your contract

Why compare business electricity quotes with SmarterBusiness?

Comparing business electricity quotes and switching suppliers is one of the simplest ways of reducing your bills. When you compare quotes with SmarterBusiness, our team of energy experts will conduct a full market analysis to find you the best deals tailored to your exact business needs*.

We do all the research and hard work for you, analysing the data to not only look for the cheapest electricity tariffs* but also take into consideration contract terms, green credentials, and customer support levels to recommend deals that fit in with your business model and ethos. We can also handle the switching process for you, dealing with both your current and new suppliers, so all you have to do is sit back and enjoy the savings made after the switch.

We have been assisting businesses across the UK for years, helping them to save thousands on their energy bills. Comparing electricity tariffs with us is quick, simple, and will cost you absolutely nothing. Click ‘Get a Quote’ now to get started.

What types of business electricity tariffs are available?

  • Fixed rate tariffs

We save you the time and effort of researching what’s on offer from each provider by doing all of that for you. Because we understand how providers work, we are able to tap into every possible deal they offer and how each of these could benefit you based on your usual energy consumption.

  • Variable rate tariffs

Unlike fixed rate tariffs, these tariffs offer unit rates that fluctuate in line with wholesale electricity costs. This means that your business will instantly be affected by any future price hikes caused by shocks to the market, but on the other hand, you’ll also benefit from any drop in electricity costs. If you’re confident that wholesale electricity costs are likely to fall over the duration of your contract, then you could make significant savings with a variable rate business electricity tariff.

  • Rolling tariffs

A rolling electricity tariff, also known as a rollover contract, occurs when your current business electricity contract ends and you fail to negotiate a new one or switch supplier. Rolling tariffs typically charge much higher unit rates and standing charges than usual, known as out-of-contract rates, so it’s important to be aware of when your business electricity contract ends to avoid overpaying.

  • Deemed tariffs

Like rolling tariffs, deemed rate tariffs have rates that are set by the supplier and are usually poor value for money. Deemed electricity tariffs occur when a business moves premises but fails to negotiate a new energy contract. If you’ve recently moved business premises, you should compare quotes and switch immediately to avoid paying deemed rates.

Smarter Business Practices to Reduce Your Energy Costs

Our team of energy experts can also advise you on how to implement sustainable business practices to help reduce your overall electricity usage, further reducing your bills. There are many things you can do to make your business electricity use more efficient, and some methods will work better than others depending on the nature of your business. Some smarter business practices you should be employing include:

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Use Energy-Efficient Appliances

Switching to energy-efficient appliances at your business premises can result in significant savings on your electricity bills. For example, LED lights use up to 85% less electricity than traditional halogen lights, while energy-efficient heaters, air conditioners, and refrigerators can all drastically reduce your usage, too. While replacing energy-intensive appliances with modern, efficient upgrades may come with a significant cost initially, especially for larger businesses, this investment will result in significant savings in the long term.

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Adopt Sustainable Business Practices

It’s important to adopt sustainable business practices across your entire business operations in order to reduce your electricity usage, and this would involve educating your employees on what they should and shouldn’t be doing in the workplace. This can include the most simple tips, such as turning off lights and appliances when not in use, making the most out of natural sunlight and heat during the winter, and using fans instead of AC in the summer. An energy consultant can help to identify inefficiencies in your business practices that may not be obviously apparent, as can the use of energy monitoring software, including smart meters.

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Perform Regular Energy Audits

An energy audit will give you invaluable insight into the electricity usage and efficiency of your business, so it’s important to perform these regularly, especially as your business grows and adapts. An energy auditor will highlight inefficiencies in your business and provide you with recommendations to reduce your electricity usage without harming your business operations or output. Audits are also highly recommended before investing in energy-efficient appliances and technology, as they can pinpoint exactly where you need to reduce consumption, giving you peace of mind that any expensive investments will be worthwhile.

Which appliances in your business use the most electricity?

This entirely depends on the nature and size of your business, but some of the most common electricity-intensive appliances in the workplace include:

  • Air conditioning units
  • Electric heaters
  • Computing equipment
  • Lighting fixtures
  • Fridges
  • Servers
  • Printers
  • Dishwashers
  • Electric kettles
Eye_appliances

How to switch business electricity tariff

Switching business electricity suppliers is simple, free, and will only take a few minutes of your time. Just follow these steps to switch to a cheaper tariff today*:

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1. Fill out the form

Before you start, make sure you have all the information you need to switch, including the name of your current business electricity supplier, the details of your tariff, your annual usage, and general details like your business name and address. Then, simply enter these details into our form to get started.

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2. Choose a tariff

With your details, we’ll conduct a comprehensive search of the business electricity market and provide you with a list of free quotes tailored to your business needs. Compare the rates and terms to find a tariff that you’re happy with.

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3. Enjoy the savings

Once you select a new tariff, we’ll do all the hard work for you. This includes informing your current supplier of your intention to switch, agreeing on a start date with your new supplier, and dealing with any correspondence with both. The entire switching process will be handled for you, and at no point will your business premises be disconnected.

What to look for in a business electricity supplier

When looking for the best electricity supplier for your business, you may be tempted to go for the cheapest tariff available*. However, as a responsible business owner, there are many other factors to take into consideration:

  • Rates:

Compare both the unit rates and standing charges offered by each tariff to work out which one offers the best value for money*. Larger businesses should look for low unit costs, while companies with lower energy consumption will want to lock in low standing charges.

  • Terms:

You should also compare the various terms and conditions, such as the contract length and early exit fees.

  • Customer Service:

Considering a supplier’s reputation for customer service is especially important for businesses, as any issues with your supply could damage your revenue. Electricity suppliers often prioritise businesses over domestic customers, but it’s worth researching the actual level of support you’ll receive before signing any contract.

  • Green Credentials:

Sustainability is increasingly important to consumers, and showing that your company shares these values can result in more business and higher loyalty. Choosing a renewable energy supplier is one way to show your commitment to sustainability, and green electricity tariffs are more competitive today than they’ve ever been.

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FREQUENTLY ASKED QUESTIONS

Can I cancel my business electricity tariff at any time?

To cancel your business electricity contract before its end date, you will be charged an early termination fee, which varies depending on the supplier, tariff, and how much time is remaining on your contract. There is also no cooling-off period with business electricity contracts, so you should be certain that you’re happy with the terms and conditions before signing. When your contract is up for renewal, or you’re moved onto a rolling contract, then you’re free to cancel and switch suppliers.

How long does it take to switch business electricity providers?

While comparing electricity tariffs and choosing a new supplier takes just a matter of minutes, it may take up to 21 days for your supply to be switched over. However, this depends on a number of factors, and in some cases, it could take as little as five days.

How much can you save by switching business electricity supplier?

This entirely depends on the size of your business, its annual electricity consumption, and the rates of your current tariff. If you’re currently on an uncompetitive electricity tariff, such as a rolling contract or deemed tariff, then you could save up to 45% on your business electricity bills. For big companies, this could help to save thousands of pounds each year.

Is business electricity cheaper than domestic electricity?

In general, business electricity rates are typically cheaper than domestic electricity rates. However, as most businesses must pay 20% VAT on electricity bills and generally use much more energy than domestic households, business electricity bills will appear larger than domestic bills.

Can I switch to a green electricity supplier?

Yes. Many business energy suppliers source their electricity from 100% renewable sources, while others may use a mix of renewable and non-renewable energy or be involved in carbon offsetting schemes. When comparing business electricity suppliers, you can check the fuel mix of each. And while 100% green energy suppliers used to charge a premium for their tariffs, they are much more competitive in today’s market.

What types of businesses use the most electricity?

Whichever industry your business is in, it likely uses a lot of electricity to operate. However, businesses in some sectors, such as restaurants, hotels, large offices, and manufacturing companies, will invariably use more electricity than others. For electricity-intensive businesses, comparing tariffs and switching to the best deal is essential*.

* All prices are reviewed against fluctuating market values and subjective variables and may not always reflect the best possible price.