Written by Mark Langshaw Reviewed by Craig Watson
19 March 2026
First Published
What is business energy?
Business energy is essentially just gas and electricity for companies but it’s a broad topic that branches out into other areas such as net zero and carbon footprint management.
While commercial heat and power works in much the same way as domestic utilities, there are key differences to understand if you want to optimise your firm’s energy performance.
Key features of commercial energy
Here’s a rundown of business energy’s key components and how it differs from domestic.
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Sold in bulk: Unlike domestic fuel, commercial energy is sold in bulk rather than on a monthly basis, which means it is cheaper than domestic energy.
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Longer contracts: Business energy contracts are generally longer than household contracts, sometimes running up to five years, with no cooling-off period.
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Single-fuel only quotes: While gas and electricity is sold bundled together to households, business gas and electricity are usually sold as standalone plans.
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Bespoke deals: When a business takes out a commercial energy deal, the plan is sold bespokely and tailored to their needs and usage requirements.
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Free health checks available: Commercial energy advisers provide free, no-obligation health checks for businesses so they can find out whether switching suppliers is in their interest and whether their energy efficiency can be improved.
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Factor |
Impact & Key Supplier Checks |
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Business Size |
Suppliers categorise firms as Micro, Small, or Medium/Large. Larger businesses often access lower unit rates (kWh) due to buying power, but may face higher daily standing charges. |
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Annual Usage |
Your total consumption (kWh) dictates your "bracket." High-usage businesses are often offered bespoke prices, while low-usage firms may be placed on standardized "matrix" rates. |
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Industry & Usage Profile |
Suppliers check when you use energy. Businesses operating during off-peak times (evenings/weekends) often secure lower rates than those operating 9-to-5, Monday to Friday. |
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Contract Type |
Fixed-rate deals offer protection against market spikes. Variable or Rollover rates are typically the most expensive, often costing 33% more than a negotiated fixed deal. |
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Geographic Location |
Regional costs vary based on the local distribution network. For example, businesses in the Midlands often see lower prices than those in North Scotland due to ease of supply. |
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Credit Score |
Suppliers perform a commercial credit check. If a business has a lower score, the supplier may request a security deposit or apply a "risk premium" to the unit rates. |
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Meter Type |
Larger firms using over 100kW of electricity require a Half-Hourly (HH) meter, which provides more accurate data and allows for more complex, precision-based pricing. |
How commercial energy prices are set
Business energy prices are determined by market conditions, namely supply and demand and the cost of global gas prices. Suppliers will then assess the business in question individually and decide what to charge based on the factors highlighted in this table.
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