Business Energy

Understand, Manage and Reduce Your Business Energy Costs

Energy is an important running cost for many businesses.

However, business energy can feel complicated. Contracts work differently from home energy, prices can vary, and it is not always clear what you are paying for.

At Energility, we want to make business energy easier to understand.

So, whether you run a small shop, office, café, workshop, care service or larger organisation, this guide will help you understand the basics.

First, we will look at how business energy works. Then, we will explain bills, contracts and meters.

After that, we will look at ways to reduce costs and use energy more efficiently.

What Is Business Energy?

Business energy is the electricity and gas used for work or commercial purposes.

For example, a business may use energy for:

  • Heating
  • Lighting
  • Computers
  • Machinery
  • Cooking
  • Hot water
  • Refrigeration
  • Air conditioning
  • Charging vehicles
  • Other equipment

However, every business is different.

For example, an office may use most of its electricity for computers and lighting. A restaurant, on the other hand, may use large amounts of gas and electricity for cooking, refrigeration and hot water.

Therefore, understanding how your business uses energy is the best place to start.

Business Energy Is Different From Home Energy

Business and household energy may both involve electricity and gas.

However, the contracts are not always the same.

For example, business contracts may:

  • Run for longer periods
  • Have different rates
  • Have different renewal rules
  • Use different contract terms
  • Include different taxes and charges
  • Be based more closely on business energy use

Therefore, do not assume that a business energy contract works in the same way as a household tariff.

Instead, check the terms carefully.

Understanding Your Business Energy Bill

A business energy bill can contain a lot of information.

At first, this may seem confusing.

However, most bills are easier to understand once you know what to look for.

The main areas normally include:

Energy used

Unit rate

Standing charge

Meter readings

Taxes and other charges

Contract information

So, let’s look at these one at a time.

Energy Use

Energy use is normally measured in:

kilowatt-hours, or kWh.

This tells you how much electricity or gas the business has used.

For example:

If your business uses:

1,000 kWh

then you will normally pay the agreed unit rate for those 1,000 units.

Therefore, the more energy you use, the more important the unit rate becomes.

What Is a Unit Rate?

The unit rate is the price charged for each kWh of energy.

For example, imagine your electricity rate is:

25p per kWh

and the business uses:

1,000 kWh

The energy part of the bill would be:

1,000 × £0.25 = £250

However, this is not usually the whole bill.

You may also pay a standing charge and other costs.

What Is a Standing Charge?

A standing charge is normally a daily charge.

You usually pay it even if the business uses little or no energy that day.

For example:

Suppose the standing charge is:

60p per day

Over 30 days:

£0.60 × 30 = £18

So, the standing charge adds:

£18

to the bill.

Therefore, when comparing business energy, look at both:

Unit rate + Standing charge

A low unit rate does not always mean the lowest total cost.

Check Your Meter Readings

Meter readings help your supplier work out how much energy you have used.

Therefore, accurate readings matter.

If the supplier does not have a real reading, it may use an estimate.

Sometimes, that estimate may be too high.

At other times, it may be too low.

So, check your bill.

If you see:

Estimated

or:

E

next to a reading, the bill may not be based on actual use.

Where possible, provide an up-to-date meter reading.

That can help keep bills more accurate.

Business Smart Meters

Many businesses now have smart meters.

These can send meter readings to the supplier automatically.

As a result, you may not need to provide readings yourself.

However, smart meters can also help in another way.

They can make energy use easier to understand.

For example, more detailed data may show when your business uses the most energy.

Then, you can ask:

Why is use high at this time?

Perhaps heating is running before anyone arrives.

Or, equipment may be left on overnight.

Therefore, energy data can help you find waste.

What Are MPAN and MPRN Numbers?

Business energy accounts often use supply numbers.

For electricity, this is called the:

MPAN

For gas, it is called the:

MPRN

These numbers identify the energy supply point.

They do not identify the meter itself.

Therefore, they can stay linked to the property even if the meter is changed.

You may need these numbers when changing supplier or setting up an account.

They can usually be found on your energy bill.

Business Energy Contracts

Business energy contracts can run for a set period.

For example, a contract may run for:

1 year

2 years

or longer.

During that time, you agree to the terms of the deal.

However, leaving early may not always be simple.

Therefore, always check:

  • Contract start date
  • Contract end date
  • Unit rate
  • Standing charge
  • Exit rules
  • Renewal terms

Then, keep the contract information somewhere easy to find.

Fixed Business Energy Contracts

A fixed contract can provide more certainty.

For example, the agreed unit rate may remain fixed for the contract period.

This can make budgeting easier.

However, fixed does not always mean that the whole bill can never change.

For example, some taxes, charges or other costs may still change depending on the contract.

Therefore, read the terms carefully.

Variable Business Energy Contracts

With a variable contract, prices can change.

This may provide more flexibility.

However, it can also make future costs harder to predict.

Therefore, consider how much price certainty your business needs.

A business with a tight budget may value stable rates.

Another business, however, may prefer more flexibility.

Know When Your Contract Ends

Your contract end date is very important.

Why?

Because business energy contracts can have different rules when they end.

For example, if you do nothing, your account may move onto different rates or terms.

These may cost more.

Therefore, do not wait until the final day.

Instead:

First: find your contract end date.

Next: check when you are allowed to arrange a new deal.

Then: compare your options.

Finally: make a choice before the old contract ends where possible.

Planning ahead gives you more control.

Moving Into Business Premises

If you move into new business premises, check the energy supply straight away.

First, take meter readings.

If possible, take clear photos as well.

Next, find out who supplies the electricity and gas.

Then, contact the supplier and explain that you are the new occupier.

This helps make sure you are only charged from the correct date.

It also reduces the chance of problems with the previous occupier’s account.

Moving Out of Business Premises

The same care is needed when leaving.

First, take final meter readings.

Next, send them to the supplier.

Then, give the supplier your moving date and forwarding details.

Finally, keep a copy of the readings and final bill.

This can help if there is a dispute later.

Business Energy and VAT

Business energy can include VAT.

However, the rate that applies can depend on the situation and how much energy is used.

Some organisations may also qualify for different treatment.

Therefore, if the VAT on your bill looks wrong, check with the supplier or seek suitable tax advice.

Do not assume that every business pays energy VAT in exactly the same way.

Climate Change Levy

Some business energy bills may also include the Climate Change Levy, often called CCL.

This is a tax linked to business energy use.

However, exemptions or reduced rates may apply in some cases.

Therefore, if you are unsure why CCL appears on your bill, ask your supplier for an explanation.

Larger or energy-heavy businesses may also want specialist advice.

How Much Energy Does Your Business Use?

Before trying to reduce your bill, find out how much energy you use.

Start with your bills.

Look at:

  • Monthly use
  • Yearly use
  • Seasonal changes
  • Electricity use
  • Gas use
  • Cost changes

Then compare different periods.

For example, does energy use rise sharply during winter?

If so, heating may be a major cost.

Alternatively, is electricity use high all year?

Then, equipment, refrigeration, lighting or IT may be more important.

Find Your Base Load

A useful idea is base load.

This is the energy the business uses even when very little is happening.

For example, overnight electricity may still be used by:

  • Fridges
  • Freezers
  • Servers
  • Security systems
  • Heating controls
  • Vending machines
  • Equipment left on

Some of this use is needed.

However, some may be waste.

Therefore, check what is running when the building is empty.

This can be one of the easiest places to find savings.

Heating

Heating can be a major business energy cost.

Therefore, good control matters.

First, check when the heating comes on.

Next, check when it switches off.

Then, look at the temperature setting.

For example, there may be little value in heating an empty office for hours before staff arrive.

Likewise, heating may not need to run long after everyone leaves.

So, match heating times to how the building is actually used.

Avoid Heating and Cooling at the Same Time

Some buildings use both heating and air conditioning.

However, poor controls can sometimes cause the two systems to work against each other.

For example:

Heating raises the temperature.

Then:

Air conditioning lowers it again.

As a result, energy is wasted.

Therefore, make sure heating and cooling controls work together.

This can be especially important in larger offices and shops.

Lighting

Lighting is another common business cost.

Fortunately, it can often be improved quite easily.

First, use LED lighting where suitable.

Next, switch lights off in empty areas.

Meanwhile, make good use of daylight.

For example, there may be no need for every light to be on beside a bright window.

In some areas, motion sensors or timers may also help.

However, safety should always come first.

Computers and Office Equipment

Computers, monitors, printers and other office equipment all use electricity.

Individually, the amount may be small.

However, across a large office, the total can add up.

Therefore, encourage equipment to enter sleep mode when not being used.

Likewise, switch off suitable equipment at the end of the day.

However, do not switch off servers, alarms or other systems that need constant power.

Refrigeration

For shops, cafés and food businesses, refrigeration can be a major cost.

Unlike many appliances, fridges and freezers run all day.

Therefore, efficiency matters.

First, check door seals.

Next, keep condenser areas clean where the maker recommends.

Then, avoid leaving doors open longer than needed.

In addition, make sure the equipment is not set colder than necessary.

Small problems can become expensive when the equipment runs 24 hours a day.

Kitchens and Catering

Commercial kitchens can use large amounts of energy.

For example, energy may be used for:

  • Ovens
  • Hobs
  • Fryers
  • Dishwashers
  • Refrigeration
  • Extraction
  • Hot water

Therefore, good planning can reduce waste.

For example, don’t preheat equipment much earlier than needed.

Likewise, switch off suitable equipment during long quiet periods.

Meanwhile, keep equipment clean and well maintained.

Efficient equipment usually works best when it is looked after.

Hot Water

Hot water can also add to business costs.

This is especially true in:

  • Hotels
  • Cafés
  • Restaurants
  • Hairdressers
  • Care services
  • Gyms

Therefore, check for leaks and dripping hot taps.

Next, insulate suitable hot-water pipes.

Then, check that water is not being heated far earlier than needed.

However, water temperature also affects hygiene and safety.

So, do not reduce temperatures without understanding the system and the health requirements.

Insulation

Just like a home, a business property can lose heat through:

  • Roofs
  • Walls
  • Windows
  • Doors
  • Floors
  • Gaps

Therefore, suitable insulation can reduce heating demand.

However, the right solution depends on the building.

For example, an old stone shop may need a different approach from a modern office unit.

So, understand the building first.

Then choose the improvement.

Draughts and Doors

Businesses with doors opening all day can lose a lot of heat.

For example, shops may have customers coming and going constantly.

Therefore, check whether suitable door closers, draught seals or entrance systems could help.

However, accessibility must still be maintained.

So, energy saving should never create a barrier for customers or staff.

Energy-Efficient Equipment

When replacing equipment, energy use is worth considering.

For example, a newer motor, fridge or heating system may use less energy.

However, replacing working equipment just to save energy does not always make financial sense.

Therefore:

First: work out the energy saving.

Next: compare it with the replacement cost.

Then: consider maintenance and lifespan.

Finally, decide whether replacement offers good value.

Simple Energy Maths

You do not need complex maths to understand most business energy use.

A few simple calculations can help.

Energy Use

Energy = Power × Time

For example:

A machine uses:

5 kW

and runs for:

4 hours

Then:

5 × 4 = 20 kWh

So, it uses:

20 kWh

Working Out the Cost

Now suppose electricity costs:

25p per kWh

Then:

20 × £0.25 = £5

So, running the machine for four hours costs:

£5

This simple calculation can help you understand which equipment costs the most to run.

Annual Savings

Suppose an improvement saves:

10 kWh per day

The business operates:

300 days per year

Then:

10 × 300 = 3,000 kWh saved

If electricity costs:

25p per kWh

then:

3,000 × £0.25 = £750

So, the yearly saving would be around:

£750

This can help you decide whether an energy-saving improvement is worth the cost.

Simple Payback

Suppose that improvement costs:

£2,250

and saves:

£750 per year

Then:

£2,250 ÷ £750 = 3 years

So, the simple payback is:

3 years

However, this is only a basic calculation.

For example, energy prices may change.

Likewise, maintenance costs may need to be considered.

Even so, simple payback can be a useful starting point.

Renewable Energy for Businesses

Businesses can also consider renewable energy.

For example:

  • Solar panels
  • Battery storage
  • Heat pumps
  • Biomass in suitable settings
  • Small wind in suitable locations

Solar panels can be especially useful for businesses that use a lot of electricity during the day.

Why?

Because solar generation is also strongest during daylight hours.

Therefore, the business may be able to use a high share of the electricity as it is produced.

Solar Panels for Business

Before installing solar panels, look at your electricity use.

For example, does your business use most of its electricity during the day?

If so, solar may fit the demand well.

Next, check:

  • Roof space
  • Roof direction
  • Shading
  • Building ownership
  • Structural condition
  • Planning needs
  • Grid connection
  • Installation cost

Then compare the expected savings with the cost.

Do not choose a system simply because it is large.

Instead, choose one that suits the business.

Battery Storage

A battery can store electricity for later.

For example, solar electricity made in the afternoon could be used during the evening.

However, batteries cost money.

Therefore, the financial case depends on how the business uses electricity.

A business that can already use most solar power during the day may gain less from a battery.

So, check the numbers before buying.

Electric Vehicles

Businesses are also using more electric vehicles.

As a result, EV charging can become part of the energy plan.

Before installing chargers, consider:

  • Number of vehicles
  • Charging times
  • Electrical supply
  • Maximum power
  • Future growth
  • Tariff structure

For example, several vehicles charging at once can create a large electricity demand.

Therefore, load management may help reduce the peak demand.

Energy Monitoring

You cannot manage what you cannot see.

Therefore, energy monitoring can be useful.

Start with your monthly bills.

Then, where possible, look at daily or half-hourly data.

Next, compare energy use with business activity.

For example:

Why did electricity use stay high on Sunday when the business was closed?

That question may reveal waste.

So, good monitoring turns energy data into useful action.

Give Someone Responsibility

Energy saving works better when someone takes ownership.

This does not need to become a full-time job.

However, one person could be responsible for:

  • Checking bills
  • Taking readings
  • Looking for unusual use
  • Checking heating times
  • Recording savings
  • Reviewing contracts

Then, energy becomes something the business manages rather than simply pays for.

Involve Staff

Staff can also help reduce energy waste.

However, don’t simply tell people:

“Use less energy.”

Instead, explain what actions matter.

For example:

Switch lights off in empty rooms.

Report heating problems.

Don’t leave suitable equipment running overnight.

Keep external doors closed where practical.

Clear actions are easier to follow.

Don’t Reduce Comfort Too Far

Energy efficiency should not make working conditions poor.

For example, staff still need:

  • Suitable heating
  • Good lighting
  • Fresh air
  • Safe equipment
  • Comfortable working conditions

Therefore, the aim is not simply to use less energy.

Instead, it is to remove waste while keeping the building comfortable and safe.

Check for Grants and Support

Businesses may sometimes be able to get help with energy-saving work.

For example, support may be available through:

  • Government schemes
  • Local councils
  • Business support programmes
  • Energy-efficiency loans
  • Local funding

However, schemes change.

Therefore, check current support before starting major work.

Funding may also differ across England, Scotland, Wales and Northern Ireland.

Compare Business Energy

Reducing energy use can lower costs.

However, the price you pay for energy also matters.

Therefore, it makes sense to look at both:

How much energy you use

and:

How much each unit costs

Energility’s Compare Business Energy service is planned to launch in January 2027.

Until then, our free guides are here to help you understand business energy and prepare for comparison.

A Simple Business Energy Plan

You do not need to change everything at once.

Instead, use a simple order.

First: collect your bills.

Next: understand your energy use.

Then: find waste.

After that: make simple low-cost changes.

Next: look at larger improvements.

Finally: review your energy contract.

Then repeat the process from time to time.

This turns energy management into an ongoing part of running the business.

Quick Business Energy Checklist

Ask:

  • Do I know when my energy contract ends?
  • Are my bills based on real meter readings?
  • Do I understand my unit rate?
  • Do I understand my standing charge?
  • Is heating running when the building is empty?
  • Are lights left on?
  • Is equipment running overnight?
  • Is refrigeration working properly?
  • Are there draughts or poor insulation?
  • Could heating controls be improved?
  • Could solar panels suit the business?
  • Am I checking energy use regularly?
  • Have I checked for grants or support?
  • Have I compared my energy options?

You do not need to solve every issue immediately.

Instead, start with the easiest useful change.

Then move to the next one.

Quick Summary

Business energy does not need to be difficult.

First, understand your bill.

Next, check your contract.

Then, find out how and when your business uses energy.

After that, look for waste.

Meanwhile, improve heating, lighting and equipment where it makes sense.

Next, consider larger improvements such as insulation or renewable energy.

Finally, compare energy contracts when the time is right.

Most importantly:

Use less where you can. Pay a fair price for what remains.

Energility

Understand More. Spend Less. Live Better.