Business Gas Prices

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Business Gas Prices – May 2024

Business gas prices in May 2024 – the table below shows average business gas prices per kWh offered on one-year fixed contracts in May 2024.

SizeAnnual Consumption kWh1 Year fixed gas rate p/kWh
Small10,000 to 50,0005.8
Medium50,000 to 100,0005.3
Large100,000 +5.1

Important note: The information above is based upon the latest published wholesale gas data but does not represent live gas prices. Business gas rates change daily and are location-dependent. To get today’s business gas rates, start by entering your postcode below.

Source: The above data has been compiled using:

  • Wholesale natural gas future rates on the National Grid published by the ICE exchange.
  • Three-month rolling average non-commodity rates offered in the commercial gas market using AquaSwitch quoting data.

 

Current business gas prices

Current business gas rates in the UK and their trends over the last year are shown below in our graph, updated weekly by our experts:

Graph of current business gas rates - 15 May 2024 update

Average business gas rates in the UK

Our table below shows average business gas rates in the UK. The data consists of one-year fixed gas rates offered by business gas suppliers in 2024 compared to the previous three years.

SizeAnnual Consumption kWh2021 average rates p/kWh2022 average rates p/kWh2023 average rates p/kWh2024 average rates p/kWh
Small10,000 - 50,0005.0716.318.916.24
Medium50,000 - 100,0003.6515.878.515.74
Big100,000 +4.2815.628.365.55

Source: The information above is based on the latest wholesale gas prices published on the ICE exchange and average non-commodity costs as per AquaSwitch quoting data.

Business gas prices contents:

What is a good business gas rate?

A good business gas rate depends on several factors but is especially influenced by wholesale gas markets.

In the 2010s, business gas rates were as low as 2p/kWh but have risen significantly since the onset of the Ukrainian conflict in 2022. See the latest business gas rates above.

Geopolitical events always influence business gas rates, and predicting future gas prices is challenging. However, our business gas comparison service can help you get the best business gas rates in today’s market.

Are business gas prices falling?

Business gas prices fell significantly in 2023 but remained largely stable in 2024. The chart above shows how business gas prices per kWh have changed over the past year.

With wholesale gas prices falling back towards normality, it’s a great time to find out what deals are available to your business. Get quotes tailored to your business today with the AquaSwitch business gas comparison service.

Factors that are making business gas prices expensive in 2024

Business gas rates in 2024 remain approximately double the rates paid by businesses before 2021. Our experts summarise the key factors contributing to the high cost of business gas rates:

The UK’s dependence on natural gas imports

The UK’s dependence on natural gas imports

The UK possesses natural gas reserves in the North Sea, but these are in decline and are expected to be completely depleted within the next 15 years.

In 2006, the UK lost its self-sufficiency in natural gas when consumption exceeded North Sea production for the first time. As production continues to decline, the gap between consumption and production widens further. The UK imports around 40% of its natural gas from other countries.

European gas prices and the conflict in Ukraine

European gas prices and the conflict in Ukraine

Since the start of the war in Ukraine in early 2022, Russia, the world’s largest gas exporter, has restricted its usual plentiful and cheap supply of natural gas into Europe.

With the reduced Russian supply, the demand for gas in Europe has significantly exceeded the continent’s available natural gas production, increasing prices.

In the last decade, the UK has relied on purchasing natural gas from continental Europe through interconnecting pipelines to make up for the falling production in the North Sea.

Expensive LNG imports

Expensive LNG imports

To substitute gas imports from Europe, the UK now imports liquid natural gas on ships from America and the Middle East, which is introduced to the national gas grid at three LNG regasification terminals on the British coast.

Importing natural gas by ship is significantly more costly than transporting gas via pipelines overland. This method of importation has led to a marked increase in the cost of gas for both homes and businesses in Britain.

Source: BEISSupply of Liquefied Natural Gas in the UK

Business gas prices explained

Choosing the right business gas supplier and tariff is vital for business owners as it directly affects how much you need to pay on your business gas bills.

Unlike the household energy market, no price cap protects business gas rates. If your business pays a standard variable tariff, gas rates could be twice as much per kWh as the fair market price.

Business gas rates are a significant cost for most companies, so we’ve produced this ultimate guide to business gas rates and prices to give you all the information you need.

What’s included in business gas rates?

Business gas rates are the set of charges that companies pay for a business gas supplier to provide a gas supply through the mains network.

Here are the key components of simple business gas rates:

  • Unit price – Gas consumption is measured in kWh. A business gas tariff will state how much is charged for each kWh of gas. This will either be a fixed rate through a contract or a variable rate that changes with market conditions.
  • Daily standing charges – A typical business gas tariff will include a fixed daily cost for maintaining a connection to the local gas distribution network. The standing charge is calculated in pence per day.
  • Climate change levy – A fixed government tax on businesses to encourage efficient gas usage. The CCL is charged to all non-micro businesses for each kWh of gas used.
  • Value-added tax – Business gas rates are taxable under UK VAT laws. Microbusinesses pay VAT at 5%, whereas all other businesses pay at the standard rate of 20% on top of all three charge elements above.

How much is business gas per kWh?

The cost of 1 kWh of business gas varies depending on several factors, including the supplier, location, tariff, and state of the wholesale gas market.

In the last year, the market’s cost of 1 kWh of business gas has ranged from 6 to 12 pence.

Find out the current business gas rates available for your business.

Why are micro business gas prices higher?

The government’s quarterly publication of energy prices consistently shows that micro businesses pay higher gas prices per kWh than larger businesses.

Ofgem, the regulator, says this is because “the complexity of the market, with its wide variety of contracts and lack of accessible information about prices, means some microbusinesses find it hard and costly to engage in the market to find a better deal.”

At AquaSwitch, we make it simple for micro businesses to find the best deals. For more information, check out our guide to small business energy.

Source: Ofgem strategic review of the microbusiness retail market.

Do large businesses get better commercial gas prices per kWh?

Yes, large businesses typically enjoy cheaper commercial gas prices compared with SMEs and other smaller companies.

This is primarily a matter of purchasing power. As with any goods bought in bulk, the more you buy, the cheaper prices you get. Large businesses receive bespoke quotes when looking for a new gas tariff reflecting lower ‘bulk buy’ price

Finding the best business gas prices

In the last few years, gas prices have soared, but that doesn’t mean that you can’t still save money on business gas prices. So, how do you find the best business gas prices?

Here’s our three-step process to help you find the best business gas prices.

Compare a range of gas rates

Compare a range of gas rates

Collect quotes from our panel of trusted business gas suppliers, including unit rates and standing charges.

Accurate consumption estimate

Accurate consumption estimate

Our business energy experts assist you in making an accurate estimate of annual gas consumption.

Compare estimated annual cost

Compare estimated annual cost

Calculate and compare the expected annual cost of each of your business gas quotes.

Business gas prices calculator

Understanding your business gas bill can be complicated. On the final page of your bill, your supplier will give you a ‘details of charges’ section showing how each element of your business gas rates has been calculated.

To help demonstrate how business gas rates work, our in-house experts have built a handy business gas rates calculator below.

How do you calculate business gas rates?

The biggest confusion in business gas rates is that suppliers charge per kWh of gas used by your gas meter measures gas volume, in either cubic meters or feet.

Our business gas prices calculator aims to cut through this confusion by calculating the conversion between your meter readings and kWh. Here’s how it works:

Metric meter gas consumption calculation:

  • kWh = Difference in gas meter reading (m³) * Volume correction factor * Calorific value ÷ Conversion factor

Imperial meter gas consumption calculation:

  • kWh = Difference in gas meter reading (ft³) * Conversion factor to cubic metres * Volume correction factor * Calorific value ÷ Conversion factor

Where:

  • The volume correction factor is an industry figure to account for atmospheric pressure, typically around ~1.02.
  • Calorific value adjusts for changes in the composition of gas when burned. It can vary slightly per supplier. Typically, ~39.2 MJ/m³ is considered a reasonable estimate.
  • The conversion factor is used to convert from joules to kWh, which is 3.6.
  • The conversion factor to change from ft³ into m³ is ~0.028.

Average annual business gas usage in kWh

The biggest factor determining business gas prices is how much gas your business consumes. All business gas tariffs charge for each kWh of gas that flows through the gas meter at your commercial property.

As a guide, here are the annual figures for the average business gas usage:

Business SizeAverage Annual Gas Consumption (kWh)
Micro5,000
Small Business15,000
Medium Business35,000
Large Business75,000
Industrial500,000
Average British Home12,000

Source: Statista: Business Energy Consumption UK.

What are the benefits of fixed-rate business gas rates?

Business gas suppliers typically offer their best prices on fixed tariffs to attract new customers. Here are the three main benefits of switching to fixed-rate business gas rates:

Easy to forecast

Easy to forecast

With fixed gas rates, you’ll have certainty over the cost of each kWh of gas your business consumes. This makes budgeting for gas bills straightforward, as you’ll only need to estimate the volume of gas your business will use each month.

Price protection

Price protection

Fixed business gas tariffs provide cost certainty for small companies where gas bills are a significant overhead. Fixed tariffs protect against unexpected rises in the wholesale cost of gas during the duration of the business energy contract.

Cheaper rates

Cheaper rates

Fixed-rate business gas rates are usually more economical than variable tariffs, as your business commits to using a particular supplier for a set period. Most companies will save immediately by switching to a fixed tariff.

Business gas prices and the government discount

Responding to the energy crisis of 2022, the UK government introduced two schemes that automatically discounted business gas bills:

  • Energy Bill Relief Scheme (October 2022 to March 2023) – A generous unlimited automatic discount scheme that capped the wholesale element of business gas rates to 7.5p/kWh.
  • Energy Bill Discount Scheme (April 2023 to March 2024) – A smaller discount of 0.7p/kWh on business gas rates where the wholesale element of gas tariffs exceeded 10.7p/kWh.

These government support schemes have now ended and have not been replaced.

Without government support on business gas prices, it’s important to secure the best deal from the open market. Use our comparison service to find the best business gas rates today.

Business Gas Prices – FAQs

Our business gas experts answer all the common questions on business gas rates.

Do all business gas rates come with a standing charge?

Not all business gas rates come with a standing charge. If you get priced with a standing charge, you can contact your supplier and discuss having gas rates with no standing charge. However, this is usually offset by a higher unit rate.

A zero-standing charge gas tariff isn’t necessarily the cheapest option, depending on your commercial gas consumption.

We advise you to shop around, compare business gas prices, and understand exactly what you’re looking for in your new supplier.

Are business gas prices capped?

No, the British government does not impose price controls on the business gas market. In contrast, for households, Ofgem regulates the gas suppliers with an energy price cap, ensuring they cannot charge more than a maximum unit rate and standing charge.

The absence of a business energy price cap means that out-of-contract business gas rates are significantly more expensive than the typical fixed gas rates offered to new customers. To avoid these costly default variable gas rates, we recommend regularly comparing the business gas market for the latest fixed rates.

Can suppliers increase business gas prices mid-contract?

If you’re on a variable rate contract, you will, unfortunately, be riding the highs and lows of the business gas market, and some days you’ll be paying considerably higher rates than other days.

As long as your business is locked into a fixed rate business gas contract, they can’t. During a fixed-rate contract, your supplier cannot increase their business gas price per unit kWh.

A few exceptions exist to the rules around fixed rate business gas contracts.  Check out our article on unexpected increases in business energy contracts.

Is gas cheaper for businesses?

The government’s latest energy prices data directly compared business and home gas bills. Here’s what they found in 2023:

  • Average annual home gas prices – £1,304
  • Average equivalent business gas prices – £1,247

Business gas supplies were £57 ( ~4% ) cheaper than those for households. The prices shown assume 13,600 kWh of annual gas consumption in both cases.

Business gas prices per kWh are usually cheaper as businesses typically sign up for a longer contract than your average household.

This means the supplier can buy the entire contract’s worth of gas in bulk at a cheaper rate and pass any savings onto the business.

However, unlike homes, companies pay VAT at the standard rate and the climate change levy on top of their gas bills.

Why are business gas standing charges so high?

The standing charge in a business gas tariff is charged daily regardless of whether your business uses any gas. This fixed charge can seem like an unnecessary daily expense, but it’s worth remembering the business gas standing charge pays for:

  • The maintenance of your connection to the local gas transporter.
  • Renting your business gas meter.
  • Your supplier’s customer services department and billing your company each month.

Most buildings in the UK are designed to rely on gas for heating purposes, but some are already beginning to phase this out in anticipation of net-zero by 2050 by:

Which region has the cheapest business gas prices?

Businesses served by the East Midlands gas distribution network enjoy the cheapest gas rates per kWh.

Cadent Gas operates the East Midlands gas distribution network and has the cheapest network costs, a significant component of business gas rates.