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Saving money on business energy contracts

By Nicole Wilson

How to translate contract terminology and shop around for the best energy tariffs

small business owner checking the energy market for a better deal

How much energy does my business use?

Finding out exactly how much energy your business uses is easy, because it's included on your energy statement. This number will usually be labelled 'consumption' and it's measured in kWh (kilowatt hours). Often, your supplier will detail your monthly use as well as your annual estimated usage.

If you're a brand new business or you need to estimate your energy use without a statement, here’s the average electricity consumption for UK businesses in a year.

Micro business: Between 5,000 kWh and 15,000 kWh

Small business: Between 15,000 kWh and 25,000 kWh

Medium business: Between 30,000 kWh and 50,000 kWh

Large business: More than 50,000 kWh

What's the average business energy bill?

The price of business energy depends on your supplier and your tariff, as well as your usage. Things like your address and operating hours can also make a difference, because the price of delivering energy to your business is linked to the demand on the grid and the infrastructure in your area. That means the average bill will vary by region and industry.

If you suspect you're paying too much for your energy, you're probably right. Ofgem estimates that 25% of small businesses are on an expensive 'deemed rate' or 'default rate' tariff. More on those later.

Take a look at our comparison table for the average annual energy bill for small businesses in the UK. Bulb only has one tariff, so we've used our competitors' cheapest available business tariffs for a fair comparison.

How can I compare business energy tariffs?

The price of a business energy tariff depends on:

A rate per kWh unit of gas or electricity. This is the price of your energy.

A standing charge. This is the cost of keeping your gas and electricity supplies connected to the network.

So, how do you know a good price when you see it?

The truth is, it's very hard to compare like-for-like prices between one business energy supplier and another.

In the domestic market, one-size-fits-all pricing helps to protect people from unpredictable energy bills. Business energy, on the other hand, is a less regulated marketplace, which can become a playground for third-party sales teams with big sales targets.

Business owners are often expected to shop around for the best deals over the phone. You might decide to hire an energy broker to take the hassle out of price comparison, but you risk finding yourself on a tariff that's better for the broker's commission than your business' bank account.

Many online energy calculators lead directly to a broker, too, so be sure to do your research when you're shopping around.

The length of your contract is an important thing to consider when comparing tariffs. The price per kWh might look attractive on a fixed-term deal, but flexibility isn't baked into most rates, and there's no easy way to leave a fixed-term contract without buying your way out. The cost of doing this reflects the amount you'd owe if you fulfilled the length remaining on your contract, which can be anywhere between 28 days and 5 years.

If none of this is filling you with optimism, we hear you. At Bulb, we'll never lock you into a fixed-term contract and we'll never charge you for leaving. All of our business members sign up on a rolling basis, so you can decide whether you’re getting the best bang for your buck.

Bulb's business tariff is designed to be flexible and fairly priced. As well as investing in technology to save on our own running costs, Bulb for Business rates tend to be lower because you won’t be paying a premium to lock the price in for a fixed term. Instead, you'll only pay for the energy your business uses, at a rate which reflects the true cost of getting it to your property.

Avoiding out-of-contract rates

This is one of the easiest ways to reduce your business energy costs. An out-of-contract rate goes by many names. It's the same as a 'deemed' rate, a 'standard' rate or a 'default' rate. It's the David Bowie of contract terminology.

Essentially, an out-of-contract rate is the most expensive way of buying business energy, because it's the plan your business is rolled onto automatically once your fixed term is over. You might find yourself on an out-of-contract-rate when you move into a new business property, too.

If you've signed up for a fixed-term energy contract, keep careful tabs on when that contract comes to an end as well as the notice period you've agreed to. You'll want to give yourself plenty of time to see if your energy supplier can still offer you the best deal. If you decide to switch, you can ask your new supplier to kick in as soon as your contract ends, meaning you'll avoid default rates altogether.

Illustration of a business owner looking at a calendar

Typically a supplier's notice period is 30 days, but this can extend to 120 days in some cases. You can find this date in your supplier's Terms and Conditions and we suggest putting it on your calendar with a big, fat pen.

If you're a Bulb for Business member, you're on our flexible tariff, and you can switch away whenever you like. Put simply, we don't have out-of-contract rates because we don't have fixed-term contracts.

We always recommend that you shop around before you come to the end of an energy contract. If you're happy with your supplier but you're already on their default rate, it might be worth negotiating a new contract so you're not paying over the odds for your energy.

If you are open to switching suppliers to avoid out-of-contract rates (or fixed-term contracts altogether) have a look at our guide on how to switch business suppliers.

Which is the cheapest business energy supplier?

We don't mean to toot our own trumpet, but Bulb is consistently the lowest-priced business energy supplier. We work hard to keep prices down because it's a big part of our mission to provide cheaper, greener energy to as many people as possible. We do this in a few ways:

Better Technology

We invest in digital tools to streamline operations and give businesses direct access to their energy account.

Single Tariff

We only offer one, low-cost tariff. Our operating costs are lower because we don't have the complexity of managing lots of different payment plans.

Lower Profits

We make less money than our competitors and pass the savings onto you. We believe the more businesses going green, the better.

Find out how much your business could save by switching to Bulb

How to use less business energy

It might sound obvious, but another way to save money on your energy is to reduce the amount your business uses. One of the biggest steps you can take as a business owner is to get your team enthusiastic about saving energy, too.

The most effective ways to reduce your bill will vary from workplace to workplace, but here are some quick tips from Bulb HQ to get you started:

  • Swap regular light bulbs for LEDs

  • Switch electronics and chargers off at the wall overnight

  • Make sure your workplace has the right level of insulation and ventilation

a friendly sleeping computer

  • Encourage working from home

  • Invest in energy-efficient kitchen appliances

  • Turn the lights off in communal spaces (maybe make sure no-one's in there first)

  • Set computers to sleep when you're away from your desk

  • Turn down the thermostat (even one degree will make a difference)

  • Don't heat unused spaces (tropical stationery cupboard, we're looking at you)

  • Communicate energy usage with the team and reward any savings

  • Use a laptop instead of a desktop computer

  • Share your workspace

Find more detailed tips in our guide to making your business more energy efficient.

Get a quote today