What is a Good Rate for Business Electricity?
Last Updated 10th of May 2025
5 minute readUnderstanding business electricity rates can be tricky. We’re here to simplify things for you, helping you find the best rates for your business. Let’s break down what makes a good rate for business electricity and how to find it.
A good rate for business electricity depends on factors such as usage, location, and contract terms. Generally, a competitive rate is between 12p-15p per kWh, but this can vary based on your provider and the type of business you run.
There’s more to finding the right rate than just looking for the lowest price. Keep reading to understand what factors you need to consider when choosing the best rate for your business’s electricity needs.
Find out if you’re paying too much. Click below to learn what a good electricity rate looks like for your business and how to get it.
What is a Good Rate for Business Electricity?
Finding a good rate for business electricity means balancing cost, contract terms, and service quality. A good electricity rate is one that helps your business save money, supports its energy needs, and doesn’t lock you into a long-term deal unless it’s beneficial. The price for business electricity is usually measured in pence per kilowatt-hour (p/kWh). This is the amount you pay for the electricity your business uses. A “good” rate varies based on factors such as usage, size of the business, location, and the type of contract you choose.
Business electricity rates are not set in stone. They fluctuate depending on market conditions, regional energy prices, and the contract terms you agree to. Small businesses may be able to secure rates on the lower end of the spectrum, while larger companies might negotiate better deals based on high usage.
A “good” rate, therefore, is one that is competitive within your business sector and location, offering flexibility and savings. It’s important to keep in mind that while a low price is attractive, the quality of the service and customer support are also essential considerations for a long-term partnership with your electricity supplier.
How to Find a Good Rate for Business Electricity?
When looking for a good rate for business electricity, it’s essential to understand what influences these rates and how you can get the best deal for your specific needs.
Factors Influencing Business Electricity Rates
Several factors impact the rate you’ll pay for business electricity, and understanding these can help you negotiate a good deal:
- Energy Consumption: Larger businesses with high energy consumption often pay lower rates due to their size. Suppliers offer bulk discounts, making the cost per unit cheaper for high-usage businesses. On the other hand, small businesses with lower consumption may not get such discounts but can still find competitive rates with the right supplier.
- Location: Your geographical location plays a big role in determining your rate. Energy costs vary by region, so businesses in more remote areas may face higher costs due to infrastructure and supply challenges. Urban areas typically benefit from more competitive pricing due to greater supply infrastructure.
- Contract Length: Many electricity suppliers offer both short-term and long-term contracts. Long-term contracts may provide a more predictable rate, but some suppliers might offer lower rates with flexible short-term deals. Evaluate which is more beneficial based on your business’s energy usage and financial planning.
- Type of Business: Your sector can impact the rate you pay. Certain industries, such as manufacturing or hospitality, tend to have higher energy demands, which may influence their rates. Service-based industries typically have lower usage and can often find competitive rates.
- Market Conditions: The energy market is influenced by global supply and demand, geopolitical events, and local market conditions. Prices can fluctuate, so it’s important to stay informed about the broader energy market, especially if you have a long-term contract.
What Is a Good Rate for Business Electricity?
In the UK, a good rate for business electricity typically ranges between 12p and 15p per kWh, but this can vary widely depending on the factors mentioned above. For smaller businesses, anything below 15p per kWh is considered competitive. Larger businesses with higher energy consumption might be able to secure rates as low as 10p-12p per kWh.
However, a good rate for business electricity doesn’t just mean the cheapest rate. A comprehensive energy plan that includes good customer service, flexibility, and contract options is just as important. Consider the following when evaluating a rate:
- Fixed vs. Variable Rates: Fixed rates provide stability and predictable monthly bills, whereas variable rates can fluctuate with the market. Fixed rates are often beneficial for businesses that want to avoid unexpected price hikes.
- Green Energy Options: Some businesses prefer to source their electricity from renewable sources. This might come at a higher cost, but it’s becoming increasingly important for businesses looking to align with sustainability goals.
- Additional Charges: Pay attention to any additional charges such as standing charges, which are a fixed daily fee that suppliers charge regardless of your consumption. These can sometimes make a rate appear lower than it actually is.
How to Compare Business Electricity Suppliers
Comparing electricity rates from various suppliers is the best way to ensure you’re getting a good deal for your business. Here’s how you can go about it:
- Use Comparison Websites: Many websites allow you to compare electricity rates from different suppliers. These sites provide instant estimates of your potential savings, helping you to choose the best supplier.
- Get Quotes: It’s also wise to get direct quotes from suppliers. Some suppliers may offer tailored rates based on your energy usage, location, and business needs. Be sure to ask about any hidden fees or extra charges.
- Consult with Energy Brokers: If you’re unsure about what rate is best for your business, consider working with an energy broker. Brokers can provide expert advice and negotiate with suppliers on your behalf to secure the best deal.
Examples of Business Energy Rates
Here’s a breakdown of typical business electricity rates based on different types of businesses and usage levels. These rates are based on the average prices for businesses in the UK. Keep in mind that these are just examples and rates may vary based on factors such as location, contract type, and energy consumption.
| Business Type | Average Consumption (kWh per year) | Average Rate (p/kWh) | Typical Annual Cost |
| Small Office (Low Usage) | 5,000 – 15,000 kWh | 13p – 15p | £650 – £2,250 |
| Retail Shop (Medium Usage) | 20,000 – 50,000 kWh | 12p – 14p | £2,400 – £7,000 |
| Restaurant or Café (High Usage) | 50,000 – 100,000 kWh | 11p – 13p | £5,500 – £13,000 |
| Manufacturing Business (Very High Usage) | 100,000+ kWh | 10p – 12p | £10,000 – £12,000+ |
Key Takeaways from the Table
- Small Office: A small office typically consumes between 5,000 and 15,000 kWh of electricity annually. Rates for these businesses range between 13p and 15p per kWh, with annual costs between £650 and £2,250.
- Retail Shops: Retail businesses with moderate energy consumption (between 20,000 and 50,000 kWh) can expect rates between 12p and 14p per kWh. Annual costs for retail shops can range from £2,400 to £7,000.
- Restaurants and Cafés: These businesses have higher energy demands, often needing between 50,000 and 100,000 kWh annually. As a result, their rates can be slightly lower, ranging from 11p to 13p per kWh, with costs between £5,500 and £13,000.
- Manufacturing Businesses: Larger manufacturing businesses that consume over 100,000 kWh per year benefit from bulk energy rates, often between 10p and 12p per kWh. Their annual energy costs typically range from £10,000 to £12,000 or more, depending on usage.
These examples give you an idea of what businesses of various sizes and energy consumption levels might expect to pay. If your business falls into one of these categories, you can use this table as a reference point when comparing electricity rates from suppliers.
Finding a good rate for business electricity doesn’t have to be complicated. Click the link below to get in touch with an expert who can help you find the best rates for your business’s electricity needs.
FAQ
What is the average cost of business electricity?
The average cost of business electricity is between 12p and 15p per kWh in the UK, but this varies depending on your business size, location, and energy consumption.
How can I reduce my business electricity costs?
You can reduce your business electricity costs by improving energy efficiency, switching to a cheaper supplier, negotiating better rates, or considering renewable energy options.
What is the best energy contract for my business?
The best energy contract depends on your business needs. If you prefer price stability, a fixed-rate contract might be ideal. If you can tolerate fluctuating prices, a variable-rate contract may offer savings during lower market prices.
Can I switch suppliers during my contract?
Yes, you can switch suppliers even during your contract, but you may be charged early termination fees. Review your contract terms and consider switching when it’s most cost-effective.
Are there any hidden fees I should watch out for?
Yes, some suppliers may charge standing charges, exit fees, or admin fees. Always read the fine print before signing any agreement to avoid unexpected costs.