“Tariff” is one of the most loaded words in UK business energy. To suppliers it means a specific contract structure with defined price-setting rules; to customers it often just means “what unit rate am I on”. This guide explains every business energy tariff type available in the UK in 2026 with the trade-offs of each.
1. Fixed-rate contracts
Unit rate (p/kWh) and standing charge (p/day) are agreed at the start and locked for the contract term — typically 12, 24, 36, 48 or 60 months. Your prices do not change for the life of the contract regardless of what wholesale electricity does.
Best for: SMEs (under 100k kWh/year) wanting price certainty.
2. Flexible / variable contracts
Multi-year framework where unit rates track wholesale movements monthly or quarterly. The supplier hedges on your behalf and adjusts your price.
Best for: sophisticated mid-large buyers (over 1 GWh/year) with risk appetite.
3. Pass-through contracts
You pay the wholesale unit rate plus each non-commodity cost as a separate transparent line item. Highest level of cost visibility.
Best for: large I&C buyers (over 5 GWh/year) with internal energy expertise.
4. Deemed-rate contracts
The default tariff a supplier puts you on if you move into a premises and have not signed a contract. Deemed rates are usually 50-80% above market. See our deemed contracts guide.
5. Out-of-contract / rollover
The tariff your supplier moves you to if you let your fixed contract expire without signing a new one. Like deemed rates, these are punitive. Ofgem rules from 2024 give you 30 days to switch off rollover tariffs without exit fees.
Other tariff variants
Green / renewable tariffs
Variant of any of the above where the electricity is matched with REGOs or sleeved from a named renewable generator. See our renewable energy guide.
Time-of-use tariffs
Different unit rates for different times of day. Basic version is Economy 7 (off-peak overnight rate). HH-settled tariffs typically have multi-band time-of-use pricing with red/amber/green windows. See our Economy 7 for business guide.
No-standing-charge tariffs
Higher unit rate but no daily standing charge. Suits very low-volume sites where the standing charge dominates the bill. See our no-standing-charge tariffs guide.
Smart fixed tariffs
Fixed unit rate with a small variable component — usually a “trigger” if BSUoS or wholesale spikes outside an agreed band. Less common in 2026 than during the 2022-23 crisis.
Which tariff is cheapest?
Generalising:
- Under 100k kWh/year: 24-month fixed contract usually cheapest.
- 100k-1m kWh/year: 12-36 month fixed or flexible (depends on wholesale curve).
- Over 1m kWh/year: pass-through or flexible usually cheapest because supplier margin is smaller and you control hedging.
Frequently Asked Questions
Fixed-rate contracts dominate the SME market. Roughly 80% of UK businesses under 100k kWh/year are on a 12-36 month fixed tariff.
Sometimes — flexible tariffs let you benefit from falling wholesale prices, but expose you to rises. On average they slightly under-perform fixed tariffs over a full cycle, but for active buyers who time the market they can deliver 1-2p/kWh of saving.
Deemed-rate contracts and out-of-contract / rollover tariffs are the most expensive on the market — typically 50-80% above a properly negotiated fixed contract. Both are avoidable with timely contract management.
Generally no — fixed-rate contracts charge an early-termination fee equal to the remaining unit rate × estimated remaining usage. Switching mid-contract only makes sense if savings significantly outweigh the exit fee.
A fixed-rate contract with a small variable component triggered if specific wholesale or non-commodity components move outside an agreed band. Less common in 2026 than during the 2022-23 energy crisis when wholesale uncertainty was high.
Want to see which tariff suits your meter? Get a free 60-second business energy quote covering fixed, flexible and pass-through options.
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