What Is Business Energy?

If you have ever wondered what business energy is and how it differs from the energy at home, the short version is this: it is the same gas and electricity, but bought on a commercial contract. Those contracts work very differently from domestic tariffs, which is why understanding them can save your business a lot of money. This guide explains the essentials in plain English — and you can compare business energy prices whenever you are ready.

What counts as business energy?

Business energy is the gas and electricity used at commercial premises — offices, shops, cafés, warehouses, workshops, surgeries and factories. If the supply is in a company name and used to run a business, it is business energy, even for a small home-based or single-room operation.

It splits into two supplies, each with its own meter and supply number:

• Business electricity — identified by an MPAN number on your bill.
• Business gas — identified by an MPRN number.

How is business energy different from domestic energy?

Three differences matter most:

• No price cap. Domestic energy is protected by the Ofgem price cap. Business energy is not — your rate is whatever you agree in your contract, which is exactly why comparing matters.
• Different tax. Most businesses pay 20% VAT on energy (homes pay 5%), and many also pay the Climate Change Levy. Low-usage businesses and charities can qualify for the reduced 5% rate. See our guide to VAT on business energy.
• Fixed terms, no cooling-off. Business contracts are usually fixed for 1–5 years and are binding once signed — there is no automatic cooling-off period like there is for households.

For a fuller side-by-side, read business vs domestic energy.

How is business energy priced?

Every business energy bill is built from two charges:

• Unit rate — the price per kWh of energy you use. In 2026, typical UK business electricity runs 22–30p per kWh and gas 6–9p per kWh.
• Standing charge — a fixed daily fee to keep the supply connected, charged even on days you use nothing. Read what a standing charge is.

The unit rate itself is mostly the wholesale energy price, plus network charges, environmental levies, supplier margin and VAT.

Types of business energy contract

There are three you will hear about:

• Fixed — your unit rate and standing charge are locked for the term. Most SMEs choose this for budget certainty.
• Flexible / pass-through — the price tracks the wholesale market. Suited to very large users only.
• Deemed / out-of-contract — the expensive default rate when no contract is in place. Avoid it. See deemed contracts explained.

Our full guide to business energy tariffs covers each in detail.

How to pay less for business energy

Compare the whole market against your real usage, switch before you roll onto deemed rates, and lock a fixed contract when wholesale prices dip. An independent broker does this for you at no cost — suppliers pay the commission, not you.

Who needs a business energy contract?

If your premises are used mainly to run a business, the supply should be on a business energy contract — even for sole traders and small operations with their own commercial supply. Suppliers apply a "mainly business use" test: if more than half the energy at a property is used for business, it is treated as a business supply.

Common situations where a business energy contract applies:

• You have opened or taken over premises — set up a contract on day one to avoid deemed rates.
• Your existing contract is ending — start comparing 6–12 months before the end date.
• You are a landlord with empty units — you are liable for the supply until a tenant takes over.
• You run a mixed-use property — you may be able to split the supply or claim partial 5% VAT.

Not sure which applies? A quick no-obligation quote confirms your meter type and current rates, and our UK team will tell you exactly where you stand.

Frequently asked questions