Business Energy Explained

What Is Business Energy?

Business energy is the electricity and gas supplied to commercial premises — offices, shops, factories, restaurants, warehouses, care homes, and any other non-domestic property. It works similarly to domestic energy in that you pay a broker for the electricity and gas you use, but the contracts, pricing structures, and regulations are different.

Unlike domestic energy, business energy contracts are typically fixed-term agreements (usually 1, 2, or 3 years) with prices locked in for the duration. There's no automatic switching or cooling-off period — once you sign, you're committed for the term. This is why choosing the right contract matters.

Business energy also differs in how it's measured. Larger businesses may have half-hourly meters that record usage every 30 minutes, giving brokers granular data on consumption patterns. Smart meters are becoming increasingly common for smaller businesses too.

How Does Business Energy Work?

When you sign a business energy contract, you agree to buy electricity and/or gas from a specific broker at a fixed unit rate (price per kWh) and standing charge (daily fixed cost) for a set period. Your bill is calculated as: (units used × unit rate) + (days in billing period × standing charge) + VAT (20% for business) + Climate Change Levy (CCL).

At the end of your contract term, you either renew with your current broker, switch to a new one, or — if you do nothing — roll onto 'out-of-contract' or 'deemed' rates, which are typically 30-50% more expensive than negotiated rates. This is the single biggest trap in business energy, and where most businesses lose money.

A good energy broker (like Monopolising) monitors your contract end date and contacts you before renewal, comparing the whole market to secure the best available rates. This ensures you never accidentally roll onto expensive default rates.

Business Energy vs Domestic Energy: Key Differences

While the basic concept is the same, there are important differences businesses need to understand:

• Fixed-term contracts: Business energy contracts are typically 1-3 years with no cooling-off period, unlike domestic contracts which are more flexible.
• Pricing: Business energy prices are fixed at the time of contracting and aren't protected by the domestic price cap. This means rates can vary significantly between brokers.
• VAT: Businesses pay 20% VAT on energy (vs 5% for domestic), though some businesses may qualify for reduced rates.
• Climate Change Levy (CCL): An additional environmental tax on business energy usage, though some energy-intensive businesses may qualify for exemptions.
• Half-hourly metering: Larger businesses may have HH meters that record usage every 30 minutes, enabling more accurate billing and time-of-use tariffs.
• No automatic switching: Unlike domestic, there's no automatic switching service — you must actively choose to switch brokers.

Who Needs Business Energy Contracts?

Any business that occupies a commercial premises needs a business energy contract. This includes sole traders working from a dedicated business premises (not a home office), limited companies, partnerships, charities, and public sector organisations.

If you've just moved into new business premises and haven't set up an energy contract, you'll be placed on 'deemed' rates by the incumbent broker. These are the most expensive rates available — often 50%+ more than negotiated rates. It's critical to arrange a proper contract as soon as possible.

Even if you're a small business with low usage, you still need a business energy contract. Domestic tariffs cannot legally be used for business premises, even if you're a sole trader.

How to Make Sure You're Not Overpaying

The most common ways businesses overpay on energy are: rolling onto out-of-contract rates when their fixed term ends, staying with the same broker for years without comparing, and not understanding the charges on their bill.

The solution is simple: review your energy contract every 12-24 months, compare rates from multiple brokers, and never let your contract expire without a plan. This is exactly what we do at Monopolising — we compare the whole market, present clear options, and handle the switch for you, completely free.