How does business energy work?

Thinking of switching your business gas or electricity? There are a few key differences between business energy and home energy that you’ll need to be aware of before carrying out an energy comparison. Read on to discover what makes business energy different, see your contract options and find out how much your business should be paying for gas and electricity. What are the differences between business energy and home energy?

• Cheaper rates: Unlike domestic energy, which is bought and sold on a monthly basis, business energy is purchased in bulk, commercial suppliers buy enough gas and electricity to last the full length of your contract. Although this may mean you get a lower unit rate, it can also make terminating your tariff early more difficult and expensive.


• Longer contracts: While both fixed and variable rate business energy tariffs are available, commercial energy contracts can last up to five years. Unlike with a home energy tariff, which allows users to change suppliers at any point, business energy users can only switch away during their renewal window. A renewal window is usually six months before the contract expires, but it can be as short as just a few weeks in some cases.


• Bespoke quotes: With home energy tariffs, you'll typically pay the same unit rate regardless of how much energy you use. This is not the case for businesses. As companies can vary greatly in size and energy usage, business energy suppliers create bespoke quotes instead. While this means you'll get a quote tailored to your specific needs, it can make it more difficult to know if your business is getting a competitive deal or not.


• Single fuel only: Business energy suppliers don’t offer dual fuel contracts. This means that business owners wanting both gas and electricity must sign up for separate contracts, with varying unit rates and standing charges - and potentially different end dates.


• No time to cool off: Unlike domestic energy tariffs, which have a 14 day cooling-off period, once you’ve signed your business energy contract, you're locked in immediately. This is why it’s vitally important to get the best deal for your business the first time.

No business owner should be stuck with uncompetitive prices for several years. Here at Selectra, our energy experts are always available to help you find the best deal. They do the legwork of gathering customised quotes from multiple suppliers - all you have to do is pick the best one for your business. Speak to one of our friendly advisors for free on 020 3318 3633 or start a quote now.

What types of business tariffs are available?

There are four main types of energy tariffs that businesses can choose from:

• Fixed-term contracts: With a fixed-term business energy tariff, prices are locked in for the duration of your contract. Fixed-term tariffs are usually available from one to four years. While your bills will vary depending on how much energy you use, the unit cost (price per kWh) and standing charge (daily cost of using energy) will remain consistent throughout the term of the contract. Longer fixed-term tariffs are usually more expensive per unit, but they protect you against any future price hikes.


• Extended tariffs: Extended tariffs allow you to stay with your current business energy supplier for a longer period of time. If you're happy with your current provider, opting for an extended tariff could be a good idea, as they'll often reward you with lower rates if you stay with them. However, another supplier may be able to undercut these prices, so it's still always worthwhile to compare.


• Flexible tariffs: If you’re able to afford the upfront payment, you could save a lot of money with a flexible business energy tariff. A flexible tariff enables you to purchase energy in bulk in order to benefit from wholesale prices. This type of tariff can help with budgeting because you'll know exactly how much you've spent on energy before you use it. However, there's a chance your prices could rise once the contract comes to an end.


• Pass-through tariff: You can split your bill between fixed wholesale prices and variable expenses such as energy distribution costs with a pass-through tariff. While you might save money if those variable costs don't rise during your contract's term, it’s worth keeping in mind that the lack of price certainty can make budget forecasting a little more difficult on this type of business energy tariff.

Can businesses get dual fuel tariffs?

Unlike home energy users, dual fuel tariffs are not available to businesses. This is because business energy contracts are customised and bespoke. Suppliers require information and the size and energy usage of your business before deciding on the rates to offer you.

Some business energy suppliers do, however, offer better deals to businesses that buy both electricity and gas from them. Even so, going with separate suppliers may still be less expensive, which is why you should always compare before switching.

How is my business energy calculated? 

When comparing business energy prices, there are two main costs to take into account:
 

• Unit rate: The unit rate specifies how much each kilowatt-hour (kWh) of energy will cost you. This is what makes up the biggest part of your energy bill. Depending on your energy consumption, you will generally pay less the lower your unit rate is. Signing up for a contract with a fixed unit rate will help your business avoid price increases during the contract's term.


• Standing charge: The standing charge is a fixed price daily charge that covers the cost of infrastructure repair and maintenance. This cost remains the same for the duration of your contract.

These costs can depend on a number of factors, such as where in the country your business is located, what type of business it is, your contract length, payment method and your credit score.

Other costs and government fees (such as VAT and the Climate Change Levy) are also factored into your business energy bills. However, these are usually out of your supplier's control so, unfortunately, they are unlikely to change if you switch.

Save yourself the time and hassle of calculating these costs with Selectra. Get in touch with one of our energy experts today by calling 020 3318 3633 today or get a free quote now and let us do the hard work for you.

Is business energy cheaper than domestic energy?

While both business and domestic energy plans are measured in the same units, they actually differ significantly interms of both cost and contract details.

The cost of a unit of gas or electricity for a business customer can often be less than for a domestic customer. Businesses pay a lower unit price for energy, owing to the volume of energy they need. The larger your business is, the lower the unit price will be. 

Commercial energy customers can also negotiate and select contracts based on their business’s specific requirements. Domestic energy is not offered at these customised rates - instead, they are charged the same amount as the rest of their region.

While switching home energy suppliers is straightforward enough, comparing the best business  gas and electricity providers for your business can be much more complicated and time consuming. Here at Selectra, we’ve teamed up with Bionic to find the best commercial electricity deals for your business. Speak to an energy expert on 020 3318 3633 or start a quote now. We'll handle the switch for you and have you saving money in no time.

How much energy does my business use?

Every business has its own specific energy needs, but here is a breakdown of average gas and electricity consumption for micro, small, and medium-sized businesses to give you a rough sense of how much energy your business should be using.

How much does business energy cost?

The tables below break down the average gas and electricity rates for businesses. Generally speaking, the more energy your business consumes, the lower the cost per unit.

Who is the best business energy supplier?

As business energy quotes are bespoke, the best supplier depends entirely on the unique energy needs of your business. What works for one business might not be the right choice for another.

At Selectra, our trusted business energy supplier panel includes everything from independent upstarts to established energy giants. No matter how big or small your company is, we'll find the right supplier for you.

Here is a list of the business energy providers we compare through our partners Bionic:

To get a free business energy comparison, simply give a Selectra energy advisor a call on 020 3318 3633 or start a quote now. 

Our energy experts will use smart data to find the energy deals that meet your business's specific needs. All you have to do is tell us which one you prefer. We'll take care of the rest, including notifying your old and new suppliers about the switch to ensure everything runs smoothly, on time, and without disruption.

*Of Bionic customers who made a saving on a three-year business energy contract between January 2020 and May 2020, the average amount saved was £1,305.