Small business
energy help

What can I do to reduce my energy bills?

Whilst the UK government is doing what it can to help UK  businesses struggling with their energy costs, there’s a chance you could switch energy provider and save. Get in touch to discuss how Swoop can help bring energy bills down and potentially save on VAT.

Prefer to call us? Our number is 02035143044

Want extra advice on how you can reduce your businesses costs?

We’ve put together a dedicated task force to help UK businesses navigate these challenging times and help reduce their outgoings where possible. Email energy@swoopfunding.com to see how your business can benefit.

8 steps to cutting energy costs

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Turn off all non-essential equipment when the business is closed

Even when not in use, ‘vampire’ machines and devices such as computers, printers, and copiers, continue to burn energy in ‘sleep mode’. Turn off everything you can at the end of the business day.

Conduct an energy audit of your business

You can’t make savings if you don’t know what is using what or where the wastage is. A business energy audit runs a fine-tooth comb over the business, revealing all the areas where savings can be made.

Maintain steady heat and A/C

Don’t fiddle with the heating and A/C controls. Constant adjustment wastes energy and costs money. Set a comfortable temperature and let the thermostat to the rest.

Switch from electric to gas for heating

Even with the cost of installation, it may work out cheaper in the long run to heat your premises with natural gas than higher priced electricity.

Keep heating and cooling vents clear

Warm and cool air needs to circulate to be effective. Obstructing the air flow from vents with furniture or other obstacles will make your heating and A/C less efficient and consume more energy.

Cool down for less

Air conditioning is costly to use, with the typical central A/C unit consuming 3500 watts per hour when running. Other cooling methods, such as desk and ceiling fans run for a tiny fraction of this energy cost. A/C systems also need clean air flow for best efficiency. Changing filters every six months can cut 5 to 15% off your air conditioning’s energy consumption.

Reduce hot water use

It costs money to heat water. Consider ways to lower the hot water use in your place of business. This means everything from leaky hot water taps to over-filled kettles and unnecessary vehicle cleaning.

Switch supplier

It may not reduce your business energy consumption, but it could lower the price you pay per unit. If you can switch supplier without incurring a penalty, shop around for the best quote available.

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Andrea Reynolds, Swoop’s CEO & Co-Founder
Andrea Reynolds
Swoop’s CEO & Co-Founder

A word from Andrea

"Domestic energy users have the benefit of being able to compare quotes and policies from a number of providers based upon their usage. Unfortunately, this doesn’t carry over to business energy users. Business energy quotes are bespoke to each company and their needs, so it is advisable to use a broker where possible to secure the best deal."

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How does business energy work?

The business energy market works differently than the system for domestic users. Contract terms, unit rates, cooling off periods, and the ability to switch supplier are all affected, and they make the purchase of commercial energy significantly more challenging than buying for home use. Here are the essential points you need to know:

  • Business energy is cheaper per unit, but you are locked into your contract. Business energy providers buy energy from generators and gas suppliers in bulk, using ‘futures’ purchasing to buy enough energy to last the duration of your contract. The rate you pay per unit may be fixed or variable, but bulk buying typically means businesses pay less per energy unit than home users. Unlike domestic energy supply, which can be purchased on a flexible basis, business energy is sold on contract, with terms that usually run for one to three years but can last up to five years. Term contracts mean you cannot switch supplier until you are near the end of your current contract unless you are willing to pay off the remainder of the term.
  • Business energy contracts are single-fuel. Domestic users can buy ‘dual-fuel’ energy deals that combine gas and electricity supply. This option is not available for businesses, who must negotiate separate contracts for each kind of energy they require.
  • Business energy deals are tailored to your business needs. Domestic users can choose from a range of published tariffs when switching supplier. Once again, this is not an option for commercial users. When a business sets up an energy contract, the provider calculates the business’s needs and offers a tailor-made quote. Because the quote is bespoke, this makes it hard to compare suppliers, as it would be necessary for the business to contact each energy company to achieve a quoted price. Using a broker to find a good energy deal is the best option here, as the business must only deal with one entity, leaving the broker to find the best tariff on their behalf.
  • No cooling off period. Businesses must ensure the deal they are offered is the best for them before they agree to the contract, as there is no cooling-off period for commercial users. Cancelling a contract after it has begun can be difficult and expensive.

What are the current business electricity and gas rates?

Because businesses typically buy energy by contract and the price is tailored to their needs, current rates for gas and electricity can vary enormously. However, July 2022 figures for ‘deemed contracts’, (out-of-contract deals that usually offer the most expensive type of energy from providers), indicate business-use electricity costs at £0.17 to £0.19 per kWh, plus standing charge of £0.25 to £0.35 per day, and gas prices at £0.03 to £0.06 per kWh, (no standing charge). These rates do not include VAT, which is currently 20% for most business users.

Businesses do not qualify for the energy price-cap set by Ofgem, which only applies to home supply. This makes them particularly vulnerable to the surge in energy costs. To help reduce the sting of business energy price hikes, the government has introduced the Energy Bills Discount Scheme, providing a discount on wholesale gas and electricity prices for all non-domestic customers (including all UK businesses, the voluntary sector like charities and the public sector such as schools and hospitals) whose current gas and electricity costs have been significantly inflated by rising energy prices.

Tips for reducing business energy consumption

  • Turn off all non-essential equipment when the business is closed. Even when not in use, ‘vampire’ machines and devices such as computers, printers, and copiers, continue to burn energy in ‘sleep mode’. Turn off everything you can at the end of the business day.
  • Conduct an energy audit of your business. You can’t make savings if you don’t know what is using what or where the wastage is. A business energy audit runs a fine-tooth comb over the business, revealing all the areas where savings can be made.
  • Maintain steady heat and A/C. Don’t fiddle with the heating and A/C controls. Constant adjustment wastes energy and costs money. Set a comfortable temperature and let the thermostat to the rest.
  • Switch from electric to gas for heating. Even with the cost of installation, it may work out cheaper in the long run to heat your premises with natural gas than higher-priced electricity.
  • Keep heating and cooling vents clear. Warm and cool air needs to circulate to be effective. Obstructing the air flow from vents with furniture or other obstacles will make your heating and A/C less efficient and consume more energy.
  • Cool down for less. Air conditioning is costly to use, with the typical central A/C unit consuming 3500 watts per hour when running. Whilst obviously not suitable for many workplaces, other cooling methods such as desk and ceiling fans may work for your business, and run for a tiny fraction of the cost. A/C systems also need clean air flow for best efficiency. Changing filters every six months can cut 5 to 15% off your air conditioning’s energy consumption.
  • Reduce hot water use. It costs money to heat water. Consider ways to lower the hot water use in your place of business. This means everything from leaky hot water taps to over-filled kettles and unnecessary vehicle cleaning.
  • Switch supplier. It may not reduce your business energy consumption, but it could lower the price you pay per unit. If you can switch supplier without incurring a penalty, shop around for the best quote available.

What is the energy price cap, and does it apply to businesses?

Ofgem, (the Office of Gas and Electricity Markets), is the government regulator for the supply of energy to UK business and domestic users. The much-publicised ‘price cap’ is the maximum price that home-users may pay per year for average gas and electric consumption. (Home users who use a lot of energy will pay more than the price cap). The cap is reviewed every six months and it may go up and down. However, it does not apply to commercial users.

Businesses do not qualify for the energy price-cap set by Ofgem, which only applies to home supply. This makes them particularly vulnerable to the surge in energy costs. To help reduce the sting of business energy price hikes, the government has introduced the Energy Bills Discount Scheme, providing a discount on wholesale gas and electricity prices for all non-domestic customers (including all UK businesses, the voluntary sector like charities and the public sector such as schools and hospitals) whose current gas and electricity costs have been significantly inflated by rising energy prices.

Things to consider when comparing business energy providers

  • You don’t have to buy gas and electric from the same provider. Business users must buy their gas and electric on separate contracts, there are no dual-fuel deals. If you’re seeking to switch your energy provider, always compare apple to apples, that is, gas rates against other gas rates and the same for electricity. It may work out cheaper to buy each type of energy from a different provider.
  • How is the new rate being calculated? Business energy providers will typically base their quote on the size of your business – staff, premises, your location, and the type of meter used. Ask for a breakdown of the quote, so you can see how it was achieved. There may be savings in the mix. For example, if your business is growing, more staff will use more energy. How does your staff headcount factor into the overall quote?
  • Can you benefit from off-peak use? Economy 7 contracts (also called multi-rate business energy contracts), charge a lower rate from late at night to early morning. Businesses that usually operate during these hours, or that can switch some of their activities to night-time, (for example, charging their electric delivery vehicles), could save a significant amount compared to daytime tariffs. Note that Economy 7 contracts have slightly more expensive day time rates than standard, so businesses must calculate both their day and night-time consumption to ensure an Economy 7 deal will deliver real savings.
  • Where is your business based? Energy providers have different rates for different parts of the UK. Prices reflect local energy demand, the provider’s cost of operation, and the economy of the region. Therefore, expect to pay more in London and other big cities than you would in rural areas.
  • Sometimes the lowest rate isn’t the best deal Yes, you want the cheapest rate, but you also need an energy provider with good customer service. Why? Because if there’s an emergency and you need a technician to get your power back on, that cheap provider with the poor service could end up costing you more than the savings on your tariff. Remember; it may be their energy, but it’s your reputation and business on the line if the power goes down and you can’t operate.

Business energy tariffs explained

The business energy market is complicated, with a range of different tariffs, terms, and conditions. Businesses must take care when selecting their commercial energy provider. Choosing the wrong contract could be a costly mistake. The main types of tariff are:

  • Fixed term

Most businesses choose this type of deal. There may be a range of tariffs to choose from, but they will all offer a fixed unit cost and standing charge. Your bill will vary each month depending on how much energy you use.

  • Variable

Unit price and standing charge are based on market rates and can go up or down. Bills vary according to consumption and market rates and charges.

  • Extended tariff

Lets you extend your current contract with the same supplier – essentially, carry on as you were. Some providers will offer lower unit costs to customers who show loyalty by extending their contract.

  • Flex-approach tariff

You bulk-buy your energy in advance. A safe bet when prices are steadily increasing, but riskier in times of high volatility. Despite the upfront payment, this type of deal can offer large savings, as it lets you benefit from wholesale prices.

  • Pass-through Tariff

A more complicated tariff that lets the customer split their bill between the energy wholesale price and other, variable costs, such as the Transmission Network Use of System (TNUoS) charges, National Grid levies and Feed-in Tariff charges that can all change up to four times a year. Essentially, you are gambling that these variable costs will go down to lower your overall bill. Not recommended for businesses that need price certainty.

Additionally, Ofgem provides added contract protection for micro businesses, and there are other tariffs that apply for business energy users without a formal contract:

  • Deemed rate

If your contract expires and you do not switch supplier, or agree a new deal, you will be moved to this rolling , out-of-contract tariff. Deemed Rate contracts are one of the most expensive ways to buy business energy.

  • 28 day rate

An obsolete rate for businesses that have not switched supplier since the UK energy market was deregulated.

  • Rollover tariff

A different kind of deemed rate contract – used when no alternative has been agreed before your current contract’s end date. Also one of the most expensive ways to buy business energy.

What is the average business energy bill?

Business energy bills are based on a wide range of factors and there are many types of contract to control costs, (see above). This makes it difficult to calculate an average bill. However, data from BEIS (The Department for Business, Energy & Industrial Strategy) for the first quarter of 2022, reveals the following pricing per kWh:

Business sizeElectricity per kWh average costGas per kWh average cost
Very small19.44p5.10p
Small19.90p3.33p
Medium17.35p3.98p
Large17.25p3.53p
Very large17.18p4.66p

The prices shown above do not include VAT at 20%, nor do they include the Climate Change Levy, (an environmental tax charged on the energy that businesses use).

How do I switch provider?

High prices and increased volatility in the UK energy market may be here to stay, which makes it even more urgent for businesses to get the best deal they can. However, the myriad of tariffs, fees, contract terms, and providers present a vast number of variables. Getting the right deal to suit your exact business needs can be challenging.

Take the headache out of switching. Get in touch for an impartial chat and see how much you could swipe off your energy bill.

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Frequently asked questions

Similar to its predecessor the Energy Bill Relief Scheme, or EBRS, the Energy Bill Discount Scheme is designed to help UK businesses by limiting the per-unit price businesses pay on their gas and electricity bill.

Now expired and replaced by the Energy Bills Discount Scheme, the Energy Bill Relief Scheme capped the wholesale cost of energy for UK businesses between October 2022 and March 2023.

Because energy providers buy gas and electricity in bulk for commercial users, business energy is almost always cheaper than domestic supply. However, businesses that let their energy contract expire without switching to a new provider or establishing a renewal contract, will find themselves moved to a Deemed Contract or Rolling Contract. These tariffs are usually the most expensive ways to buy business energy and unit prices can be higher than those for domestic users.

If you are near the end of your current contract, or you can switch energy supplier without penalty, it is certainly worth shopping around to get a business energy comparison. A new contract may reduce your gas and electricity tariffs, lock in price-certainty, and lower the amount of VAT you pay. Upload your current energy bill to Swoop and let us find the best deal for your businesses needs.

The best energy supplier for small businesses depends on the buyer’s circumstances. Just as no two businesses are alike, so no two business energy contracts are the same. Unit rates, terms, fees, and other charges can vary enormously, which means finding the best supplier for your specific needs can be tricky Let Swoop do all the work. Simply Get in touch to find the best deal for you.

The Climate Change Levy is an environmental tax charged on the energy that businesses use. It’s designed to encourage businesses to be more energy efficient in how they operate, as well as helping to reduce their overall emissions. 

The CCL applies to businesses in the industrial, public services, commercial and agricultural sectors, and is charged on ‘taxable commodities’ for heating, lighting, and power purposes. However, CCL has been waived for the duration of the government’s energy support plan for businesses.

 

Read more: our in-depth guide to the Climate Change Levy.

The big six energy suppliers are the largest providers of energy in the UK. They provide electricity and gas to businesses and residential users. The companies in this elite group are British Gas, EDF Energy, EON, Npower, Scottish Power, and SSE.

The cheapest energy supplier for business in London is the one who provides the best tariff for your specific needs. The UK energy market is changing almost daily and for businesses seeking to switch energy supplier, the options can be bewildering. Let Swoop find the best deal for you.  Get in touch to secure the most economical tariff, and to see if you qualify for the discount VAT rate on the energy you buy.

There is no mandatory cooling off period for commercial energy contracts. This means businesses must ensure their new or renewal deal is right for their specific circumstances before they sign on the dotted line. Trying to get out of an unsuitable contract after signing can be difficult and expensive. 

Fixing your business energy price can provide price-certainty and be the best financial move when energy costs are rising. However, if energy prices go into a sudden reversal, you could be stuck paying more per unit than you should be. The question is, is a price drop likely anytime soon? If you feel uncertain about the future direction of energy prices, seek a fixed price deal for only one or two years, and hope that that energy costs have fallen by the time the contract expires.

Yes. You can prepay your business energy with a Flex Approach Tariff. This type of contract lets you bulk-buy your gas and electricity in advance, and offers the potential for large savings, as you may benefit from wholesale prices.

The number of suppliers of renewable energy for business has shrunk dramatically since the start of 2021, as dozens of providers have gone bankrupt, and their customers have been transferred to other providers. However, businesses seeking a greener energy deal can still secure a renewable energy contract from providers such as Octopus, Ecotricity, and Orsted.

Government, industry, educational, and charitable sources provide technical advice, materials, and finance to help UK SME’s achieve greater energy efficiency. Access to some of these benefits is on a case by base basis, so it is important that business owners research every option to find the best result for their organisation.

Ofgem provides an overview of all the options, but you can obtain energy saving advice from National Energy Foundation/You Gen, Energy Savings Trust, Small Business, and Gov Energy Technology. Government energy saving finance can be found here, while local councils and business initiatives may also offer energy saving financial support. You could get paid to generate your own renewable power via the Smart Export Guarantee, or secure a grant for the installation of green energy equipment. Lastly, grants may be available to you via charitable sources, or WRAP, a foundation to support the use of recycled materials.

There are no specific tax credits or rebates for choosing to buy renewable energy, but the government does provide tax breaks for the purchase and installation of energy saving equipment and systems.

If you suspect you’ve been mis-sold a business energy contract, either deliberately, or due to negligence or error by an intermediary or the energy provider, your options are three-fold:

  • Firstly, you can challenge the at-fault party directly, providing detailed evidence of the mis-selling and asking for your money back.
  • If the intermediary or energy company do not respond favourably, your next step is to report the mis-selling to Ofgem, the government regulator for the supply of gas and electricity to homes and businesses. Ofgem has an obligation to review complaints against energy companies and their intermediaries and they have the power to award compensation on your behalf. However, they can be slow to take a case on.
  • Your final option is legal. There are law firms in the UK who work on a no-win, no pay basis, and specialise in the business energy sector. They get paid by taking a percentage of any compensation they secure on your behalf but do no not charge upfront fees. If they win the case, they take their share. If they lose, you pay them nothing and they absorb the cost of the litigation.

Business energy claims are compensation cases against energy providers and intermediaries who have mis-sold business energy contracts to UK companies. (See above).

If you have the roof or ground space to accommodate them, solar panels are a good option for many types and size of business. Modern solar panels have a long lifetime and require minimal maintenance. Their installation can protect a significant portion of your business’s energy usage from increasing costs and put you ahead of growing legislation to curb emissions as the government tightens its focus on net zero.

Even though the upfront cost of installation may be higher than other investment opportunities, most businesses can expect to recover the full cost of the technology in 5 to 7 years. After that, your energy savings will be considerable, and you may even be able to make money by selling surplus energy back to the grid. For tax purposes, solar panels are a fully deductible business expense.

Read more: our in-depth guide to getting started with solar for business

A business energy audit is the process where a professional (auditor) assesses your business for any opportunities that could help save energy. The auditors will review your premises, plant, operating methods, and your current business energy contract. A good audit could pinpoint significant energy wastage and reveal the best ways to offset or correct those faults.

Businesses must pay VAT on the energy they use. The standard rate is 20% and although this is a business-to-business purchase, you cannot claim the tax back. Most businesses will pay the 20% rate, but some may qualify for a discounted 5% rate if:

  • The business is a charitable or non-profit organisation.
  • The business uses at least 60% of its energy for ‘domestic purposes’. This would apply to businesses with residential services, such as care homes or self-catering holiday accommodation. The 5% rate applies to the whole bill if you the business uses 60% or more of its energy for domestic reasons, however if it’s less than 60%, only the proportion of energy used for domestic reasons is eligible.
  • The business has ‘low’ energy usage, which is usually defined as using less than 1,000kWh of electricity every month (33kWh a day), or 4,397kWh of gas (145kWh a day).

 

Read more: our in-depth guide to business energy VAT

Ofgem, (the Office of Gas and Electricity Markets), is the Government regulator for the supply of energy to UK business and domestic users. They set the ‘price cap’ for the domestic market, regulate the operation of energy providers and distributors, and act as a watchdog on the energy industry to protect energy customers from malpractice by providers.

A kilowatt hour (kWh) is a measure of how much energy you’re using per hour. kW stands for kilowatt, a universal standard for measuring electricity. One kilowatt equals 1,000 watts. The h in kWh stands for hour – a measure of time.

The kWh is a unit if energy and your electricity provider charges you for every kWh you use. As an example, a machine that is rated at 3kWh will consume 3000 watts of power per hour. If you were paying 20p per kWh, the machine would cost 60p per hour to run.

No. Domestic users can choose a dual-fuel energy deal, but this option is not available for businesses, who must negotiate separate contracts for each kind of energy they require.

If your contract expires and you do not switch supplier, or agree a new deal, you will be moved to this rolling , out-of-contract tariff. Deemed contracts are one of the most expensive ways to buy business energy.

A rolling contract is also known as a rollover tariff. It is a different kind of deemed contract - used when no alternative has been agreed before your current contract’s end date. It is also one of the most expensive ways to buy business energy.

Multi-site meters, or multi-location business energy contracts, are a simple and efficient way to organise the billing for numerous meters. This could be the billing for meters housed in one large business site, or several meters across multiple business locations. Multi-site meters allow businesses to centralise their energy control and avoid the hassle of contracting with multiple providers and receiving multiple energy bills.

When your business moves premises, your current energy contract ceases from the date you move. Business energy contracts are linked to the supply point, which means your current deal will not transfer to your new address and you will need to secure a new energy contract for that location.

With difficulty. Your energy provider has already purchased enough energy from generators and gas suppliers to cover the period of your contract. If you pull out of the deal, they will be out of pocket. Therefore, unless you can prove you have been mis-sold your business energy contract, the only way out of the deal is to pay off the remainder of the contract term.

All you need is a recent energy bill. Get in touch and let Swoop do all the work. Save money and avoid the hassle. Find the best energy tariff for your business.

Switching will not interrupt your energy supply. When you change provider, the new vendor takes over your meter from the previous provider. This action is seamless and the consumer (you), will not notice the change until the new provider’s bill lands in your inbox.

Since the start of 2021, more than half of all UK energy providers have gone bust. In most cases, their customers – domestic and business – have been switched to new providers with no loss in service or supply. Here’s a list of the UK energy providers that have ceased trading or have gone into special administration since 01 January 2021.

20222021

Bristol Energy

Northumbria Energy

Neo Energy

Whoop Energy

Xcel Power

Together Energy

 

 

Zog Energy

Entice

Orbit

Bulb

Neon Reef

Social Energy

CNG

Zebra Power

Omni Energy

Ampower UK

MA Energy

BlueGreen Energy

GOTO Energy

Daligas

Colorado Energy

Symbio

Igloo

Enstroga

Green

Avro

People’s Energy

Utility Point

PFP Energy

Moneyplus Energy

HUB Energy

Simplicity Energy

Green Network

Pure Planet

 

Written by

Chris Godfrey

Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Barclays Bank, Metro Bank, Wells Fargo, ABN Amro, Quidco, Legal and General, Inshur Zego, AIG, Met Life, State Farm, Direct Line, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of consumer and business finance and insurance.

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