Business energy is a major overhead for UK companies, but costs vary widely depending on business size, sector, and usage. Unlike domestic tariffs, business energy prices are negotiated directly with suppliers, making it essential to understand the market before locking into a contract. So, how much does business energy cost?
Average business energy costs in 2025
Energy rates are usually split into electricity and gas, with costs based on pence per kilowatt-hour (kWh) plus a daily standing charge. Here are typical averages for UK businesses in 2025:
| Business size | Annual electricity use (kWh) | Avg. electricity unit rate | Avg. gas unit rate | Typical annual bill | Monthly cost range |
|---|---|---|---|---|---|
| Micro (1–9 employees) | 5,000–15,000 | 28–32p/kWh | 9–11p/kWh | £2,000–£4,500 | £170–£375 |
| Small (10–49 employees) | 15,000–25,000 | 27–31p/kWh | 8–10p/kWh | £5,000–£9,000 | £420–£750 |
| Medium (50–249 employees) | 30,000–50,000 | 26–30p/kWh | 7–9p/kWh | £12,000–£18,000 | £1,000–£1,500 |
| Large (250+ employees) | 100,000+ | 25–29p/kWh | 6–8p/kWh | £25,000+ | £2,100+ |
*Figures include standing charges, which typically add £100–£400 per year per fuel.
Factors that affect business energy costs
- Business size and sector – intensive industries (manufacturing, hospitality) consume more energy than offices.
- Location – regional distribution costs can make energy more expensive in some areas.
- Contract type – fixed tariffs offer budget certainty, while variable tariffs may be cheaper when wholesale prices fall.
- Contract length – longer contracts may secure better rates but reduce flexibility.
- Market conditions – wholesale prices fluctuate due to supply, demand, and global events.
How to reduce your business energy bill
- Compare suppliers before your contract ends to avoid being rolled onto expensive out-of-contract rates.
- Invest in efficiency, such as LED lighting, modern equipment, and smart meters.
- Review usage patterns to identify waste and cut unnecessary consumption.
- Consider renewable options, which can provide stability and protect against fossil fuel volatility.
Final verdict – How much does business energy cost?
In 2025, the average small business spends between £5,000 and £9,000 a year on energy, but costs can be significantly higher for energy-intensive industries. By understanding unit rates, standing charges, and usage, businesses can better predict their bills and make smarter choices when negotiating with suppliers.
FAQ – How much does business energy cost?
Not usually. Business unit rates can sometimes be lower, but standing charges and contract structures often make business energy more expensive overall. The key advantage is tailored contracts based on usage.
On average, a small business in the UK spends between £5,000 and £9,000 per year on electricity and gas, depending on its sector, size, and operating hours.
Prices depend on wholesale costs, location, contract length, and how much energy a business uses. High-consumption sectors such as manufacturing or hospitality will always face larger bills than offices.
Yes. Many businesses save 20–30% by comparing the market and switching before their current contract ends. Staying on “out-of-contract” rates usually leads to much higher costs.
Not always. Some green tariffs are competitively priced, and switching to renewables can protect businesses from fossil fuel price volatility while helping meet sustainability goals.