How Much is Business Electricity Per Unit?

By Olivia Johnson - Trusted UK Business Expert

Last Updated 8th of December 2024

4 minute read

Understanding the cost of business electricity per unit is crucial for managing energy expenses and budgeting effectively. If you’re seeking clarity on this topic, we’re here to provide detailed information to help you make informed decisions about your energy use. 

The cost of business electricity per unit typically ranges from 10p to 15p per kilowatt-hour (kWh), depending on various factors such as location, consumption level, and the specific energy plan chosen. 

Curious to learn more about the factors influencing business electricity prices and how you can manage these costs? Keep reading for an in-depth exploration.

How Much is Business Electricity Per Unit? 

The cost of business electricity per unit, measured in pence per kilowatt-hour (kWh), can vary significantly. Here are some key factors that influence these costs: 

• Location: Geographic location plays a significant role in determining electricity costs. Areas with higher distribution costs or regional policies may see higher prices. For example, businesses in urban areas might have different rates compared to those in rural locations due to differences in infrastructure and supply chain logistics.
• Consumption Level: Businesses with higher energy consumption often receive lower rates per unit due to bulk purchasing discounts. Conversely, smaller businesses with lower energy usage may face higher per-unit costs.
• Energy Plan: The type of energy plan selected (fixed-rate, variable-rate, or time-of-use) affects the cost per unit. Fixed-rate plans offer consistent pricing, while variable-rate plans fluctuate with market conditions. Time-of-use plans charge different rates based on the time of day, with peak hours typically being more expensive.
• Contract Length: Longer contracts may offer more favourable rates, but they also lock you into a set price for an extended period. Shorter contracts provide flexibility but might come with higher rates.
• Market Conditions: Energy prices are influenced by global market conditions, including supply and demand, fuel prices, and geopolitical events. These factors can cause fluctuations in electricity costs.
• Renewable Energy Options: Plans that include a higher percentage of renewable energy may cost more per unit. However, these plans contribute to sustainability and can be part of corporate social responsibility strategies.

Understanding Your Business Electricity Bill 

To manage electricity costs effectively, it’s essential to understand the components of your bill. Here’s a breakdown: 

• Unit Rate: This is the cost per kilowatt-hour (kWh) of electricity consumed. It can vary based on the factors mentioned above. 
• Standing Charge: A fixed daily fee that covers the cost of supplying electricity to your premises and maintaining the network. This charge is constant regardless of your energy consumption. 
• VAT: Most businesses are charged 20% VAT on their electricity bills, although some smaller businesses and non-profit organisations may qualify for a reduced rate. 
• Climate Change Levy (CCL): A tax on business energy use aimed at encouraging energy efficiency and reducing carbon emissions. Some energy plans exempt businesses from this levy if they use renewable energy sources. 

Comparing Business Electricity Rates 

To find the best electricity rates for your business, consider the following steps: 

• Use Comparison Tools: Online comparison tools can help you evaluate different suppliers and plans based on your business’s specific needs and consumption patterns.
• Negotiate with Suppliers: Don’t hesitate to negotiate rates with suppliers, especially if your business has high energy consumption. You might secure better rates or more favourable contract terms.
• Monitor Market Trends: Stay informed about market conditions and trends that could affect energy prices. This knowledge can help you choose the best time to lock in rates or switch plans.
• Consider Energy Efficiency: Implementing energy-efficient practices can reduce your overall consumption, potentially lowering your costs even if the per-unit price remains unchanged.

Example Table: Average Business Electricity Rates by Location 

Ready to optimise your business electricity costs? Start by comparing rates from multiple suppliers and analysing your energy consumption patterns. Our experts are here to help you navigate the options and secure the most competitive rates. Contact us today for a personalised consultation. 

FAQ 

What factors influence the cost of business electricity per unit?

Factors include location, consumption level, energy plan, contract length, market conditions, and the inclusion of renewable energy options. 

How can my business reduce electricity costs?

Use comparison tools, negotiate with suppliers, monitor market trends, and implement energy-efficient practices. 

What is the average cost of business electricity per unit?

The cost typically ranges from 10p to 15p per kilowatt-hour (kWh), depending on various factors. 

What is a standing charge on my electricity bill?

A fixed daily fee that covers the cost of supplying electricity to your premises and maintaining the network. 

How does the type of energy plan affect the cost per unit?

Fixed-rate plans offer consistent pricing, while variable-rate plans fluctuate with market conditions. Time-of-use plans charge different rates based on the time of day. 

Are there any additional taxes or levies on business electricity?

Yes, businesses are typically charged 20% VAT and may also be subject to the Climate Change Levy (CCL). 

Can renewable energy plans save money in the long run?

While renewable energy plans may have higher per-unit costs, they contribute to sustainability and can enhance corporate social responsibility efforts, potentially offering long-term benefits. 

How often should I review my business electricity contract?

It’s advisable to review your contract annually or whenever your current contract is up for renewal to ensure you are getting the best rates and terms. 

What are the benefits of using comparison tools for business electricity?

Comparison tools simplify the process of evaluating different suppliers and plans, ensuring you get the best deal for your business with minimal effort. 

Why should I consider energy-efficient practices?

Energy-efficient practices can reduce overall consumption, potentially lowering costs even if the per-unit price remains the same. 

By understanding the various factors that influence business electricity costs and using the right strategies, you can manage your energy expenses more effectively. Use these insights to find the best rates and optimise your business’s energy use.