How much do you think the average unit price for business electricity is in 2021?
The answer is 14.40 pence per kWh.
Electricity supply is important for your business, whether it is operating key equipment or lighting up the building. Therefore, you want to ensure your energy is from a reliable supplier.
But where can you find the best business electricity rates? How much are business electricity prices? This article has you covered.
What Makes Up Business Energy Prices?
When looking at your monthly energy bill, you may wonder what exactly makes up the prices. There are different costs that you should learn about. They are:
- Standing charges – This is a daily charge that covers the costs of maintenance of the national grid as well as covering the cost of transporting the electricity to your business.
- Unit costs – Measured in kWh, this is the price you pay for each unit of electricity.
These two costs are what makes up the majority of your energy bill and have the biggest impact on the price you pay for electricity. Different suppliers offer different rates, so it is wise to compare electricity providers.
What Are Average UK Electricity Prices For Businesses?
In the UK, energy prices vary depending on the business size. The UK government have provided the average electricity prices for businesses per kWh. This is based on Q1 2021 data. Below are the average prices:
| Business Size | Average Price |
| Very Small | 16.80 p/kWh |
| Small | 15.10 p/kWh |
| Small/Medium | 14.16 p/kWh |
| Medium | 13.10 p/kWh |
| Large | 13.08 p/kWh |
| Very Large | 12.24 p/kWh |
| Extra Large | 13.43 p/kWh |
| Total Average | 14.00 p/kWh |
What Are The Average Unit Prices And Standing Charges For Businesses?
Every business has different energy requirements, with large businesses needing more than micro-businesses. But how do unit prices and standing charges compare between business sizes? What is the cost per year in the electricity business?
Well, below is a small table that outlines the average electricity prices in 2021. See where your business stands and you can get an estimate of how much your business will be paying for electricity.
| Business Size | Usage Per Year | Unit Price kWh | Standing Charge | Cost Per Year |
| Micro Business | 8,000 kWh | 16.74p | 27.40p | £1,439 |
| Small Business | 20,000 kWh | 14.83p | 26.83p | £3,064 |
| Medium Business | 40,000 kWh | 13.68p | 26.41p | £5,568 |
| Large Business | 80,000 kWh | 12.93p | 26.20p | £10,439 |
What Are Electricity Prices For My Business Type?
Business electric prices will vary depending on how much power they require. Large businesses use around 80,000 kWh per year; however, small businesses can use as little as 8,000 kWh per year.
Every business is different, but what are the typical prices for your business type?
For small businesses, the average usage per year is between 15,000 kWh and 25,000 kWh. Below is a small table with a quick breakdown of what you’d expect to pay each year.
| Business Type | Unit Price kWh | Standing Charge | Cost Per Year |
| Coffee Shop | 13.42p | 26.70p | £2,109 |
| Hair Salon | 13.88p | 27.23p | £2,182 |
| Small Farm | 14.19p | 24.21p | £2,218 |
| Dental Surgery | 13.84p | 27.61p | £2,176 |
| Restaurant | 14.87p | 25.46p | £3,067 |
| Newsagent | 14.51p | 24.28p | £1,830 |
Does My Business Need A Half Hourly Meter For Electricity?
Businesses that use a lot of electricity may require a half-hourly electricity meter. But how much does the maximum demand need to be?
For businesses that have a maximum demand of 100kW or more in any half-hour period during the day, laws require you to use half-hour metering. However, for businesses that have a maximum demand of 70kW or more, they can choose to have a half-hourly electric meter or not.
What Are Some Electricity Saving Tips For My Business?
We all want to save money, the same applies to businesses. When it comes to electricity, it may seem like a huge task to save money. However, you may be mistaken. Below we’ve listed three tips for your businesses to save some money.
- Shop Around For Suppliers That Offer Renewable Sourced Electricity
There are two huge benefits to switching to a renewable energy electricity contract. Firstly, you can avoid the climate change levy. The climate change levy is a tax that businesses are required to pay for their energy. With a renewable energy electricity deal, businesses don’t have to pay the tax.
Secondly, you are doing your bit for the environment, as well as showing your customers that you are a responsible company.
- Look To Get A Smart Meter Installed
Smart meters are becoming more and more popular each year. Many energy companies now offer free smart meter installation for businesses, meaning you don’t have to fork out a large fee for them.
Smart meters take away the work for you. Gone are the days of having to provide frequent energy meter readings and checks. Smart meters send the reading straight to the energy supplier. This saves you both time and money as your energy prices will be a lot more accurate.
- Know When Your Contract Ends And Discuss Quotes
Having your contract end date saved is a good idea. We recommend shopping around to compare supplier rates roughly six months before the contract is due to expire. You will more than likely save a lot of money by switching suppliers.
What Business Electricity Tariffs Are Available For Small Businesses?
The small business electricity market is becoming increasingly competitive. With more energy companies entering the market, you now have a wide range of pricing options that can be suited to your business.
The majority of contracts will last for three years, with most suppliers offering one to five-year deals. However, when talking about tariffs, the following are available to businesses:
- Fixed-Rate Tariffs – For fixed-rate tariffs, the unit price will stay the same throughout the entirety of the contract. This option suits businesses that want some certainty, keep a similar cash flow and don’t want flexible costs. Fixed rates are easier to manage as you will pay the same consistently.
- Variable Rate Tariffs – For variable rate tariffs, unit prices can fluctuate throughout the duration of the contract. The price will change depending on the wholesale energy market. Prices can both increase and decrease. This option can be great for businesses that are happy to pay for energy that can change.
- Zero Standing Charge Tariffs – Standing charges are fixed, daily costs that are made to your supplier, even if you use zero electricity. A zero standing charge tariff ensures that customers avoid this fee. However, the unit rate will likely be higher than other standard tariffs. This is good for businesses that only use seasonal energy.
- Green Energy Tariffs – For green energy tariffs, you can take advantage of the energy that comes from renewable sources. This can be a good option for businesses that are looking to reduce their carbon footprint, as well as offering another benefit for their customers.
What Should Small Businesses Look For With Energy Suppliers?
Did you know that from an Ofgem survey, more than 50% of small and microbusinesses have never switched suppliers all because they were tied into their current contract?
This is a costly mistake many businesses make. But when switching suppliers, what should small businesses look for?
- Competitive prices with benefits – Of course, getting a cheap deal is great for any business. When it comes to energy, you want to be with a supplier that offers competitive rates, helping your business to save money.
- Reliable and trustworthy reputation – There are some great websites out there that can give you honest customer reviews. They are a good place to start when researching suppliers. You want to be with a company you can rely on, that is honest and fair. Make sure you can contact the supplier easily with a dedicated customer service team.
- Green and eco-friendly products – Many customers prefer to shop with eco-friendly businesses. Having a green energy supply could be a great way to make a sustainable choice as well as improve sales.
- Flexible contracts – We know how quickly business changes. You want to make sure your supplier can adapt to changes in your business. Whether you need a larger supply or help with bills, you want to be with a flexible supplier.
How Can I Get The Best Electricity Deal For My Business?
Selecting the cheapest electricity tariff sounds like the best thing for your business, right?
Well, you would be mistaken. While we know that saving money is of huge importance for your business, choosing the energy supplier with the cheapest tariff, without looking at other factors can be a huge mistake.
The truth is that there is a lot more to it than just saving money when it comes to your energy. The supplier you choose must be beneficial for your business, meeting your requirements and needs.
For example, the cheapest energy company may have awful customer service. If you run into problems with the supplier, you may have huge delays and disruptions when trying to contact the supplier for help.
Not only this, but many suppliers offer benefits that may be more suited to your company, even if they are slightly more expensive. We recommend shopping around and seeing what suppliers are offering.