Electricity bills have certainly left their mark on UK small businesses this year. So much so, that in April the government launched an energy efficiency campaign to help drive down the energy costs small businesses were having to pay following a hike in costs.
Then, in May, the FSB urged energy firms to renegotiate fixed term contracts with small businesses after it was found up to 1 million UK small businesses were paying inflated rates after renewing fixed long-term contracts when wholesale prices peaked last year.
In any case, electricity is one of the biggest outgoings for any micro or small business.
The amount you can expect to pay for electricity varies, depending on the expected usage for your industry, location and at what time of day (or night).
When to look for an electricity supplier
The best time to look for a new electricity supplier is when you move into a new premises – which automatically puts you on an expensive ‘deemed’ tariff – or reached the end of your fixed term contract.
You can get a better deal when looking at options as soon as you move into these new premises or when nearing the end of your current contract – which you will know because your supplier is obliged to tell you. The more organised you are in this respect, the more money you can expect to save.
According to Citizens Advice, if you’re a microbusiness you may also get extra protections when switching energy supplier.
What to look for in electricity supplier contracts
- How much it costs per unit of energy
- Any extra or hidden costs
- The length of the contact
- How much notice you need to give if you wish to change suppliers down the line
- If there’s a ‘cooling off’ period after signing up so you can change supplier without charge if you’re not happy with the service
How much can I expect my business to pay?
|Business size||Average annual electricity usage (kWh)||Average price (per kWh)||Daily standing charge||Average annual price|
|Micro business||5,000 – 15,000||29.9p||63.7p||£3,223|
|Small business||15,000 – 25,000||29.3p||84.9p||£5,485|
If you run a business from home
If you’re running your business operations from home, then you’ll typically be classed as a domestic energy customer. However, if more than half of your energy use is for business, you may qualify for a business tariff – which is typically cheaper than a domestic one.
You will need to be completely confident that the majority of energy usage will be for business, as you must also pay 20 per cent VAT, rather than 5 per cent for domestic use. It’s also worth noting if you go down this route, lighting and heating will be included, but appliances you would use whether you worked from home or not, like fridges and freezers, won’t count.
7 electricity suppliers for your small business
Octopus Energy wins eco points with its green energy offering as standard. It also has the best Trustpilot score on this list and Citizens Advice has scored the supplier highest for customer service – based on a criteria of bill clarity, ease of contact, number of complaints and how easy it is to switch. You will have to pay a bit more for those luxuries, however.
There are various tariffs offered by Octopus. Most of these are fixed rate with the assurance of 100 per cent renewable power.
Trustpilot score: 4.7
British Gas Lite is typically the cheapest for electricity alone, so it’s an obvious option to consider, especially if you’re specifically looking for electricity rather than both gas and electricity for your operations.
It’s cheap because it is entirely online, and that absence of any human support has garnered some mixed reviews online – making it Trustpilot’s lowest rated supplier on this list with a measly 3.7. In fact, you have to upgrade to a premium account if you want to speak to anyone at all. Otherwise, you have to make do with the web assistant bot.
British Gas Lite fixed-price contracts can last up to five years.
Trustpilot score: 3.7
One of the greenest electricity suppliers in the UK, with awards to back it up. Good Energy supplies 100 per cent green energy and 10 per cent green gas to its customers – offsetting the rest of its gas carbon footprint.
It isn’t just green, though. With a Trustpilot score of 4.8, it keeps a lot of current customers happy, too.
The only downside, perhaps, is that there seems to only be a variable rate tariff available for businesses.
Trustpilot score: 4.8
E-ON Next is E-ON’s offering for SMEs. Like Octopus Energy, it offers green energy as standard. This offers cheaper rates, though, so it scores highly on our list. It also promises no exit fees.
It does only offer variable rates for businesses at the moment, though – so you’re susceptible to fluctuating market rates and it didn’t fair too well in Which?’s assessment of customer service – reflected by the slightly lower Trustpilot score than some others on this list.
Trustpilot score: 4.2
Shell Energy has also been rated highly by Citizens Advice for customer service, coming second to Octopus Energy. With a 4.7 Trustpilot score for its business offering, it looks to be a safe bet.
It also offers 100 per cent renewable energy options (and offers businesses solutions for planning their own decarbonisation roadmap) as well as a choice of fixed and variable tariffs.
The best tariff for small businesses is the fixed all-inclusive SME plan.
Trustpilot score: 4.7
SSE offers 100 per cent renewable energy from their own hydro and wind farms – and they offer fixed rates for up to four years.
Their business energy management tool, SSE Clarity, is also easy enough to use, allowing you to track energy use and forecast future energy use.
Customer service does seem to let them down in comparison to other suppliers, however. SSE’s Trustpilot score of 3.8 is the second lowest on this list and Which?’s customer service review doesn’t help them a great deal, either.
It is also worth noting that by the end of 2023, SSE will be absorbed into Ovo Energy. You won’t need to switch, though.
Trustpilot score: 3.8
As one of the UK’s largest energy suppliers, EDF Energy competes well for cost. Their ‘fixed for business online tariff’ is their cheapest, although there is an exit fee with this option. They can also help with a smart meter.
3 simple ways a smart meter could help your business – Watch this easy to digest video explainer on the key benefits of installing a smart meter in your business
EDF also claims to be the UK’s biggest producer of low-carbon electricity.
Tariffs for business include:
Fixed for business – fixed rate for up to three years and there is an exit fee. This option is usually cheaper than a flexible tariff and you can manage your energy account online for viewing balance, paying bills, submitting meter readings and getting tips on how to improve energy efficiency.
Fixed for business online – The all-online tariff is the cheapest option for EDF. This is a fixed rate for up to three years with an exit fee.
Freedom for business tariff – This is a variable tariff with no exit fees so you can switch or upgrade at any time.
Trustpilot score: 4.2
More on electricity suppliers for small businesses
How to find the best energy supplier for your small business – With a steep rise in energy prices, we show you how to find the right energy supplier for your small business