Small business electricity prices

Get the latest small business electricity rates with AquaSwitch. Our free, no-obligation comparison service will give you the best electricity rates tailored to your company. Find cheaper rates and benefit from:

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Small business electricity prices – December 2023

The table below shows the average one-year fixed business electricity rates for small businesses. These business electricity rates have been put together by our experts using the latest wholesale electricity prices on the national grid.

It’s important to note that small business electricity prices can vary from region to region.

SizeAnnual Consumption kWh1 Year fixed elec rate p/kWh
Small10,000 to 50,00027.3
Medium50,000 to 100,00025.3
Big100,000 +25.1

Source: The above data has been compiled using the following:

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

Understanding small business electricity pricing

Small businesses are not protected by measures like the energy price cap in the home energy market, and unfortunately, small business electricity rates can be tricky to navigate.

But don’t worry; we are here to help you understand everything there is to know about small business electricity in our ultimate guide. We’ve helped thousands of small businesses avoid the trap of expensive out-of-contract business electricity rates.

Factors affecting small business electricity prices

The small business electricity prices currently available on the market are affected by the following factors:

  • The wholesale electricity markets – Providers of small business electricity tariffs must purchase electricity from generators or import it onto the national grid. The price of electricity on the market is impacted by global events such as the war in Ukraine and the availability of natural gas in Europe.
  • Local distribution costs – The UK is divided into several separate electricity distribution networks which connect local properties to the national electricity grid. The distribution costs depend on your region.
  • Government taxes and levies – Small business electricity bills include VAT and the climate change levy, which the UK government determines.

For more information, check out our complete guide to business electricity prices.

Comparing small business electricity providers

It’s important to know that the market for small business electricity is highly competitive, with approximately 80 business energy suppliers competing to offer the cheapest tariff.

Shopping around and comparing multiple suppliers is important for the best prices. Enter your postcode in our easy-to-use comparison tool to request quotes for your small business.

Do small businesses get help with energy bills?

Until March 2024, small businesses on the most expensive business energy tariffs will receive an automatic discount from the Energy Bill Discount Scheme.

The automatic discount applies where the wholesale element of your current business energy tariff exceeds:

  • 30.2p/kWh for electricity
  • 10.7p/kWh for gas

The scheme provides a maximum discount of 2p/kWh on electricity and 0.7p/kWh on gas bills.

For more eligibility information, here’s our complete guide to the Energy Bill Discount Scheme.

What factors to consider when choosing a supplier for your small business electricity

Here’s everything you need to know when choosing a small business energy supplier for your small business electricity rates.

Real customer reviews

When choosing a supplier for your small business electricity, you will want to choose a supplier you can trust. Take a look at our business energy suppliers to find out more about the suppliers that may be available in your area.

We recommend checking Google reviews, Trustpilot scores and recommendations from friends to help you make a final decision.

Fixed or variable rate contracts

When choosing a small business electricity supplier, you should consider whether or not you want to take out a fixed contract or a variable contract.

A fixed contract will give you certainty of how much you will be paying for business electricity per kWh for the entirety of your contract. It protects you from future price rises at the expense of missing out on potentially low prices.

A variable rate contract will expose your small business to the volatility of electricity prices, which may be beneficial if your business can participate in some form of electricity arbitrage.

See our detailed business energy tariff guide to learn more, and ask providers to give you quotes for both variable and fixed tariffs.

Your contract length

How long do you want your small business electricity contract to last? A small business electricity contract may last anywhere between 1-3 years, so ask small business energy suppliers to provide you with quotes for a range of contract terms.

Standard or renewable electricity

What type of electricity do you want? Standard, renewable or a fuel mix. When considering a small business electricity supplier, check what types of electricity they offer and whether it suits your business goals and needs.

For instance, some businesses undertake detailed carbon inventories to monitor their footprint or to ensure they are carbon neutral by purchasing carbon credits. A renewable electricity tariff ensures their carbon footprint is lower.

Choosing the right electricity plan for your small business

Small business owners have two options for business electricity plans. A fixed-rate plan with certainty over the cost of each kWh of electricity or a variable plan that will change based upon the latest market conditions.

Read on to explore the pros and cons of each of these types of business electricity plans.

You can request exact kWh pricing directly on our business electricity rates page.

Fixed-rate vs variable-rate – small business electricity plans

Fixed-rate plan

Here are the two biggest reasons to consider a fixed-rate small business electricity plan:

  • Simplicity – Fixed rate business electricity is the simplest to understand and manage. Throughout your contract, you’ll pay a fixed unit rate per kWh of electricity consumed plus a fixed daily standing charge. The simplicity means that it is easy to forecast your business electricity costs based on your actual usage for the year.
  • Certainty – The price of electricity can fluctuate widely with geopolitical events, just like it did in 2022. A fixed rate small business electricity plan protects you from rising wholesale costs.

Variable-rate plan

These are the two biggest reasons to consider a variable rate business electricity plan:

  • Flexibility – Unlike a fixed business electricity contract, you can switch business electricity suppliers anytime, avoiding expensive early termination fees.
  • Benefit from falling prices – Businesses on variable rates benefit from falling electricity prices. In the first half of 2023, wholesale electricity prices have fallen steadily, helping those companies that are on a variable tariffs.

It’s worth noting that fixed rate electricity tariffs for small businesses are usually cheaper, as suppliers want to attract switches from new customers.

Renewable energy options for small businesses

There are over 5.5 million small businesses in the country, which have an important role in the UK’s transition to net-zero.

There are two renewable energy options for small businesses:

  • Sign up for green business electricity rates – Most business electricity suppliers now offer renewable electricity tariffs, where your power is generated from wind, hydro and solar. These tariffs are more expensive than typical business electricity rates but offer the easiest route to renewable electricity.
  • Install a small-scale renewable electricity generator – Installing commercial solar panels or a small wind turbine are ‘permitted developments’, avoiding a planning permission headache. Businesses can also benefit from the smart export guarantee scheme to sell any excess electricity back to the grid, making renewables an attractive investment option.

Check out our complete guide to renewable energy options for businesses.

Frequently asked questions about small business electricity prices

Our business electricity experts are here to answer all the frequently asked questions on small business electricity prices.

How often do small business electricity prices change?

The small business electricity prices available on the market typically vary every few days. Business energy suppliers update the rates they offer daily to reflect changes in the wholesale energy market.

When you receive business energy quotes, you should act upon them quickly to avoid disappointment when your rates are no longer available.

How can I estimate my small business’s electricity usage?

The electricity usage of small businesses depends on what your company does, and precisely:

  • Day-to-day business activities
  • Building type
  • The efficiency of electrical devices

A typical small business will consume 20,000 kWh of electricity annually. As a useful comparison, a typical home will consume 2,900 kWh annually.

Check out our full article on calculating business energy usage for more information.

Which supplier has the cheapest small business electricity prices?

There is no simple answer to this, as the supplier with the cheapest small business electricity for you will depend on the following:

  • Your location in the UK, as suppliers serve different areas of the UK.
  • Your meter type defines what kind of tariff you can choose from. For example, a smart meter and a variable tariff will let you take advantage of electricity arbitrage.
  • Your small business electricity usage habits and if you are taking advantage of a variable tariff.
  • The contract length that you chose, with longer contracts (generally) offering cheaper rates.

Here at AquaSwitch, we can help you find the cheapest electricity prices for small businesses. Simply use our business electricity comparison service, and we will search the market for you.

What are some tips for managing fluctuating small business electricity prices?

Using less electricity is the best way to protect your small business against electricity price changes. Here are a few easy tips for using electricity more efficiently:

  • Install a smart energy meter
  • Promote the message of saving electricity with your staff
  • Hybrid working model
  • Use a timer to turn off devices on evenings and weekends automatically

Using our business electricity comparison service today, you can lock in a fixed electricity rate for 1 to 3 years.

How much VAT do small businesses pay on electricity rates?

Generally, businesses pay VAT at the standard rate of 20% for commercial electricity bills.

However, if your small business meets one of the following criteria, you’ll be eligible for reduced VAT rates on your business electricity. The reduced VAT is 5% if you have ‘low’ electricity usage.

Low electricity usage is classified as less than 1,000kWh monthly electricity (33kWh a day). As a guide, the average home uses 10kWh per day.

Check out our complete guide to VAT on business energy.