Wholesale energy costs play a big role in what UK businesses pay for electricity and gas. While you can’t buy directly from the wholesale market unless you’re a very large corporation, your bills are still influenced by wholesale prices. The good news is there are several strategies SMEs can use to reduce the impact and save money.
Understand how wholesale prices affect your bills
Energy suppliers purchase electricity and gas on the wholesale market, then add costs for transmission, distribution, taxes, and profit margins before passing prices on to you. Wholesale costs can make up around 40–50% of a business energy bill, meaning fluctuations directly affect what you pay.
Ways to reduce your wholesale energy costs
1. Compare fixed and flexible contracts
Suppliers build wholesale costs into both fixed and variable contracts. A fixed deal locks in rates, protecting against future price rises. A flexible contract allows you to benefit if wholesale prices fall. Reviewing both options helps you secure the most cost-effective deal.
2. Time your contract renewal
Energy prices can fluctuate daily. Businesses that track wholesale market trends and renew contracts when costs dip are often able to secure significant savings. Many SMEs benefit from working with brokers who monitor the market.
3. Consider longer-term agreements
If wholesale prices are relatively low, fixing for two to three years can protect against future increases. This is especially useful for businesses that need budget stability and can tolerate less flexibility.
4. Improve energy efficiency
Reducing consumption is the simplest way to limit exposure to wholesale price changes. Consider:
- Upgrading to LED lighting
- Installing smart meters
- Regular maintenance of heating and cooling systems
- Training staff on energy-saving practices
5. Explore renewable options
Some suppliers offer green energy tariffs that combine wholesale pricing with renewable sources. While sometimes slightly higher, they can offer long-term stability and protect your business from volatility in fossil fuel markets.
6. Negotiate through an energy broker
Energy brokers have access to wholesale market data and can negotiate bulk deals on behalf of SMEs. This can often unlock lower rates than going directly to suppliers.
The benefits of proactive energy management
- Lower bills – by reducing reliance on high wholesale costs.
- Budget certainty – knowing your rates in advance.
- Reduced carbon footprint – efficiency and renewables save money while supporting sustainability.
Final verdict
Saving money on wholesale business energy bills isn’t just about the rate you pay – it’s about timing, efficiency, and negotiation. By keeping an eye on market trends, reviewing contract types, and investing in efficiency, UK businesses can cut costs while building long-term resilience.
FAQ – Saving money on wholesale business energy bills
No. Only very large corporations or energy-intensive industries buy directly from the wholesale market. SMEs access wholesale pricing indirectly through suppliers, who factor these costs into fixed or variable tariffs.
The best time is when wholesale prices are low. This varies throughout the year and can change daily. Monitoring market trends or working with a broker helps you time renewals effectively.
Not necessarily. Fixed contracts provide certainty and protect against rising wholesale costs, but if prices fall, businesses on variable contracts may pay less. The best option depends on market forecasts and your risk appetite.
Typically, wholesale costs account for 40–50% of a business energy bill. The rest is made up of network charges, supplier margins, taxes, and government levies.
Improving energy efficiency, investing in renewables, and securing the right contract at the right time all reduce exposure to rising wholesale prices. Even small changes can add up to significant savings.