Key takeaways, 2026
- Unit-rate band: 5.8 to 8.4 p/kWh depending on volume, contract length and renewal timing.
- Down from the peak: roughly 40% below the late-2022 wholesale spike, but still double pre-pandemic levels.
- Forward curve: winter 2027 is priced 12% above 2026 spot, so the lock-in window is narrowing.
- Taxes: 20% VAT plus £0.00812/kWh Climate Change Levy on most contracts ; reductions available below threshold.
6.5p
SME average, p/kWh
Two-year fixed, 2026.
-40%
Vs 2022 peak
Wholesale gas index.
+12%
Forward 2027
Priced above 2026 spot.
£1.10
Standing charge / day
SME median, 2026.
Business gas unit rates by company size, 2026
Business gas pricing is bespoke: every supplier quote is built from your annual volume, your credit rating, your contract length and the wholesale curve on the day the quote is run. The table below shows the typical band a representative business in each size tier should expect in 2026.
| Business size | Annual use | Unit rate (p/kWh) | Standing charge (£/day) | Typical annual bill |
|---|---|---|---|---|
| Micro | 5-15,000 kWh | 7.5 - 8.4 | £0.95 - £1.10 | £1,100 - £1,650 |
| Small | 15-30,000 kWh | 6.8 - 7.5 | £1.05 - £1.20 | £1,800 - £2,750 |
| Medium | 30-65,000 kWh | 6.2 - 6.8 | £1.15 - £1.40 | £2,500 - £4,900 |
| Large | 65-350,000 kWh | 5.8 - 6.5 | £1.30 - £1.80 | £4,500 - £23,000 |
Indicative bands based on quotes from the top 12 UK business gas suppliers in 2026 for two-year fixed contracts. VAT and CCL excluded. Bespoke quotes will vary.
Why business gas prices look the way they do in 2026
The post-2022 unwind has three load-bearing drivers, all of them on the supply side of the equation.
First, European storage. The continent's gas storage facilities are now legally required to be at 90% of capacity by 1 November each year. They have hit that target in three consecutive winters, which removes the squeeze that drove 2022 prices to historic highs. UK gas demand benefits from the same buffer because it imports through the Interconnector and BBL pipelines.
Second, LNG infrastructure. Milford Haven, Isle of Grain and the Italian and Dutch import terminals have collectively added enough regasification capacity to replace the bulk of Russian pipeline supply. The trade-off is that the marginal price-setting cargo is now LNG rather than long-term contracted pipeline gas, which makes the wholesale price more volatile in the short term but lower on average.
Third, demand destruction. UK industrial gas demand has fallen by around 8% since 2022 as energy-intensive sites have switched to electric process heat, biomass and heat pumps. The trend is structural rather than cyclical and continues to weigh on wholesale demand.
The net effect: wholesale gas is materially cheaper than during the crisis, but the forward curve still prices winter risk premia above pre-pandemic levels, and that is what your retail unit rate is built on.
The four contract types, and which one fits
All UK business gas contracts fall into one of four shapes. Each has a distinct risk/reward profile, and the right choice depends on how much price uncertainty your business can tolerate and how much treasury bandwidth you can dedicate to procurement.
Fixed-term
A locked unit rate and standing charge for one to four years. Predictable bills, no upside if wholesale falls.
Best for: most SMEs, anyone budgeting on a fixed monthly cost.
Extended (rollover)
Renewing the existing contract with the same supplier, sometimes at a small loyalty discount.
Best for: low-volume sites where switching admin outweighs the saving.
Flexible (bulk)
You buy volume tranches as wholesale moves, locking each tranche at the moment of purchase.
Best for: large industrial sites with dedicated procurement.
Pass-through
Fixed wholesale price, variable distribution and non-commodity charges. Bills move with regulated levies.
Best for: sites that want wholesale predictability without locking everything.
VAT and CCL: the third of the bill that is not the unit rate
Business gas bills include two government charges on top of the unit rate and standing charge.
VAT is charged at the standard rate of 20% on the total bill. Two reduced rates exist: 5% applies if your monthly consumption is below 4,397 kWh of gas (de minimis threshold), or if you are a registered charity using gas for non-commercial activity. The reduced rate must be claimed by filing a VAT declaration with your supplier ; it is not applied automatically.
The Climate Change Levy is an environmental tax of £0.00812 per kWh of gas in 2026, after the rebalancing that brought gas and electricity into alignment. The levy is removed entirely if you fall below the de minimis threshold or sign a Climate Change Agreement. CCL is added to the bill before VAT, so the 20% is applied to a sub-total that already includes the levy.
If your supplier goes bust
The wave of UK business energy supplier failures peaked in 2021-2022 and has since slowed to a trickle, with a handful of small specialist failures in 2024-2025 and none of consequence in early 2026. If your supplier does collapse, the Supplier of Last Resort (SOLR) mechanism transfers your account to a designated replacement within a few days. Supply continues without interruption, but your unit rate moves to the new supplier's deemed contract, which is typically the highest price they offer.
A deemed contract has no exit fee and no notice period, so the recommended move is to switch again to a competitive contract as soon as the transfer settles, usually 30 to 60 days. Do not wait, deemed contracts are designed to be a safety net, not a long-term solution.
Three actions to take this year
- Pull your last 12 months of gas bills and calculate your annual kWh. This is the single input every supplier asks for, and most businesses get it wrong by 10% or more when they guess ;
- Get three to five bespoke quotes on a two-year and a three-year fixed contract. Compare the all-in number (unit rate plus standing charge × 730 days plus CCL plus VAT), not just the headline p/kWh ;
- Diarise the renewal date ninety days in advance. Most rollover penalties hit businesses that miss the renewal window and slide into a deemed contract by default.
UK business energy suppliers
Compare tariffs and contracts from every active UK business electricity and gas supplier.
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Frequently asked questions
The unit rate sits between 5.8 p/kWh and 8.4 p/kWh for most UK businesses on a one to three-year fixed contract in 2026. Micro-businesses pay the high end (around 7.5 to 8.4 p/kWh) because of higher standing charges and smaller volume discounts. Large industrial sites on flexible procurement pay the low end (5.8 to 6.5 p/kWh) on a like-for-like basis.
Three factors. European gas storage is at around 90% of capacity heading into winter 2026, up from below 30% in late 2022. UK and EU LNG import infrastructure has expanded materially, reducing reliance on Russian pipeline supply. And wholesale demand has fallen by 8% as industrial users have switched to electrified heat, biomass and heat pumps. The combined effect has been a steady downward pressure on the day-ahead wholesale price.
For most businesses, yes. The forward curve for winter 2027 is currently around 12% above the 2026 spot price, which means suppliers are pricing in expected upside. Locking a two or three-year contract at current rates secures the bulk of the post-2022 fall before the next winter shock. Flexible procurement is only worth considering if you have a treasury team that can monitor day-ahead prices weekly.
Yes, on the unit rate. Domestic gas under the price cap is around 6.8 p/kWh in 2026, while a medium business locked in at the right moment pays closer to 6.0 p/kWh. Standing charges work the other way: a daily business standing charge is typically £0.80 to £1.50 versus £0.32 domestic. For sites consuming below about 8,000 kWh/year, the higher standing charge means business contracts can actually be more expensive than domestic-equivalent use.
Yes for most businesses: 20% VAT and the Climate Change Levy at £0.00812 per kWh. Charities and businesses using less than 4,397 kWh of gas per month qualify for a reduced 5% VAT rate, and de-minimis usage also removes the CCL. The two reductions stack: a small charity on low usage can pay 15% less in tax than a comparable for-profit site.
Your supply continues. Ofgem operates the Supplier of Last Resort (SOLR) process, which transfers your account to another licensed supplier within a few days. The new supplier honours your existing balance but the unit rate moves to their deemed contract rate, which is typically the most expensive tariff they offer. The moment you are transferred, switch again to a competitive contract — there is no exit fee on a deemed contract.