Running a business in the UK means dealing with many ongoing costs — and energy is one of the most important. Yet many business owners don’t fully understand what business energy is, how it works, or how it’s different from domestic energy.
In this guide, we’ll explain business energy in the UK, how business electricity and gas work, and how UK businesses can manage their energy costs more effectively.
What Is Business Energy?
Business energy refers to the electricity and gas supplied to commercial properties rather than homes. This includes:
- Offices
- Shops & retail units
- Restaurants & cafes
- Warehouses
- Factories & industrial units
- Schools, charities, and public buildings
In simple terms, business energy UK covers all energy contracts that are not residential.
Business Energy vs Domestic Energy: What’s the Difference?
Many new business owners assume business energy works the same as home energy — but that’s not the case.
Key differences include:
| Domestic Energy | Business Energy |
|---|---|
| Fixed standard tariffs | Negotiated contracts |
| Consumer protection (price cap) | No price cap |
| Easy switching | Contract-based switching |
| Smaller usage | Higher & varied usage |
Because businesses use more energy and at different times, suppliers offer custom pricing based on risk, usage, and contract length.
Business Electricity Explained
Business electricity is supplied on a contract basis and priced differently from domestic electricity.
How business electricity pricing works:
Business electricity rates are based on:
- Annual electricity consumption (kWh)
- Business type & risk level
- Contract length (1–5 years)
- Time of usage (peak/off-peak)
- Market energy prices
The more predictable your usage, the better rates you can usually secure.
Common business electricity meter types:
- Single-rate meters – same rate all day
- Day/night meters – different rates
- Half-hourly (HH) meters – usage tracked every 30 minutes
Larger businesses often have half-hourly meters, allowing suppliers to price energy more accurately.
Business Gas UK Explained
Business gas UK works in a similar way to business electricity but is mainly used by:
- Restaurants & takeaways
- Manufacturing businesses
- Hotels & leisure facilities
Business gas pricing depends on:
- Gas consumption volume
- Seasonal usage patterns
- Contract length
- Wholesale gas market rates
Because gas prices fluctuate heavily, many UK businesses choose fixed-rate contracts to protect against sudden price spikes.
How Do Business Energy Contracts Work in the UK?
Unlike domestic energy, business energy contracts are legally binding agreements.
Typical contract lengths:
- 1 year
- 2 years
- 3 years
- Up to 5 years for large users
Once signed, businesses cannot leave early without paying exit fees, even if prices drop.
What happens when a contract ends?
If you don’t switch or renew:
- You’re placed on out-of-contract or rollover rates
- These rates are much higher
- Costs can increase by 30–100%
This is one of the biggest mistakes UK businesses make.
Deemed and Out-of-Contract Rates Explained
Deemed rates
Applied when:
- You move into a property without choosing a supplier
- No formal contract is agreed
Deemed rates are among the most expensive.
Out-of-contract rates
Applied when:
- Your fixed contract ends
- You haven’t renewed or switched
These rates can seriously damage cash flow if left unmanaged.
Who Can Get Business Energy in the UK?
You’ll usually be classed as a business customer if:
- Your property is registered as commercial
- You pay business rates
- Your energy usage is high
- Your meter is non-domestic
This includes:
- Sole traders
- Limited companies
- Partnerships
- Charities
- Landlords
How Can UK Businesses Reduce Energy Costs?
Here are practical steps every business should follow:
1. Compare business energy suppliers
Different suppliers offer different rates depending on your profile. Comparing regularly is key.
2. Lock in fixed rates at the right time
Energy prices change daily. Timing your contract can save thousands over time.
3. Monitor energy usage
Understanding when and how you use energy helps you:
- Reduce waste
- Shift usage to cheaper periods
- Negotiate better contracts
4. Avoid rollover contracts
Always review your contract 3–6 months before expiry.
Why Many UK Businesses Use Energy Brokers
Business energy pricing is complex. That’s why many companies use business energy brokers.
Benefits of using a broker:
- Access to multiple suppliers
- Better negotiated rates
- Contract management support
- Time-saving
- No need to chase suppliers
A good broker helps businesses avoid costly mistakes and stay on competitive tariffs.
Is Business Energy Regulated in the UK?
Yes — but not in the same way as domestic energy.
- Business energy is regulated by Ofgem
- There is no price cap
- Fewer protections apply
This means businesses must be proactive and informed.
Final Thoughts: Understanding Business Energy in the UK
Understanding what business energy is and how it works in the UK is essential for controlling costs and protecting your business.
To summarise:
- Business energy is different from domestic energy
- Contracts are negotiated, not standard
- Business electricity and gas prices vary by usage and risk
- Leaving contracts unmanaged can cost thousands
- Comparing and planning ahead is critical
If you want to take control of your business energy UK costs, the right strategy — and the right advice — makes all the difference.