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Managing overheads is a constant priority for any business. In many sectors, electricity is one of the largest monthly expenses and unlike household energy, business electricity isn’t built around a simple, widely referenced price cap. Rates are negotiated, contracts are bespoke, and the best option depends on your usage, location, and appetite for certainty versus risk.
By conducting a thorough business electricity comparison, you can protect your cash flow and make sure more of your revenue stays within the business. This guide covers what’s shaping the market in 2026, the main types of tariffs available, and how to secure a deal that supports your growth.
Why compare business electricity?
Many business owners assume that energy prices are fixed, or that their current supplier will automatically offer a strong renewal rate. In reality, the difference between a negotiated contract and an out-of-contract rate can be significant, and letting a contract roll over often lands you on a deemed tariff, which is typically one of the most expensive ways to buy energy in the UK.
Comparing the market helps you see the impact of unit rates and standing charges side by side. Even a small reduction in the price per kilowatt hour (kWh) can add up to meaningful annual savings, particularly for energy-intensive businesses. It matters even more in 2026 because “non-commodity” charges and newer levies can materially change the total cost of energy — sometimes as much as (or more than) the unit rate itself. For example, the Nuclear RAB charging framework linked to Sizewell C began appearing in the wider system of electricity bill charges from late 2025, with ongoing updates into 2026.
Even if your contract isn’t ending soon, understanding your current rates, and how they compare to the wider market, puts you in a stronger position when renewal time comes around.
Understanding business electricity tariffs
Business energy contracts are not one size fits all. The right choice depends on your risk appetite and how you use power throughout the day.
Fixed rate tariffs
This is a popular choice for UK small businesses. With a fixed rate deal, you agree a set price for each unit of electricity you use for the duration of the contract, typically lasting between one and four years. While your total bill will still vary based on consumption, the unit rate and standing charge remain the same. This provides budget certainty and helps protect you if market prices rise.
Variable rate tariffs
A variable rate tariff is linked to the wholesale energy market. This means the price you pay can fluctuate. If wholesale prices fall, your bills may decrease without you needing to switch. However, if prices rise, your costs can increase quickly. This is generally seen as a higher-risk approach, especially in volatile markets.
Pass through tariffs
These contracts are a hybrid model. The wholesale cost of electricity may be fixed, but other parts of the bill, such as National Grid / system charges and transmission costs, are “passed through” at cost. In 2026, these non-commodity charges can form a large share of a typical business bill, which is why this approach is often better suited to larger businesses with the resources to monitor changes closely.
Deemed and out of contract rates
If you move into new premises without signing a contract, or if your current deal expires and you do nothing, you may be placed on deemed rates. These are flexible, but are usually far more expensive than negotiated deals. You can often switch away from these rates at any time with minimal notice.
Factors affecting business electricity prices in 2026
The cost of electricity in the UK is shaped by several factors beyond wholesale market pricing.
Business size and consumption
Suppliers categorise businesses based on annual usage. Micro businesses, for example, those using no more than 100,000 kWh of electricity per year (or meeting employee/turnover thresholds), can have different protections and switching rules.
Larger companies may benefit from lower unit rates due to bulk purchasing power, but they may face higher standing charges linked to the infrastructure and risk involved in supplying them.
Non commodity costs and levies
A significant portion of a 2026 energy bill can be made up of non-commodity charges. These include Transmission Network Use of System (TNUoS) charges, which help fund the installation and maintenance of the transmission system.
Alongside network costs, newer levies and scheme charges can also influence what you pay, particularly under pass-through style contracts, where these elements are itemised rather than bundled into a single all-in rate.
Location and meter type
Your business postcode determines your local Distribution Network Operator (DNO). Areas further from generation hubs often face higher delivery charges. Your meter type also matters. Half-hourly (HH) meters, which send readings every 30 minutes, are common for larger businesses and can unlock more accurate, bespoke pricing because suppliers can model your usage pattern in more detail.
Value Added Tax (VAT)
While domestic customers typically pay a reduced rate, most UK businesses are charged VAT at the standard 20% rate on energy. Some organisations, including certain charities and small-scale users below specific thresholds, may be eligible for the reduced 5% rate under HMRC rules.
How to compare and switch effectively
The process for switching business electricity is different from the residential market because commercial contracts tend to be more tightly structured, and you won’t usually have the same cooling-off protections.
Common mistakes to avoid
A common mistake is letting a contract roll on without review. Busy business owners often focus on customers and operations, and only notice energy costs when bills increase sharply. Other avoidable issues include agreeing to terms without checking notice periods or exit fees (which can make it expensive to move later), and assuming switching will be impossible due to credit checks. While suppliers do assess risk, improving your overall financial position can increase both the options available to you and the competitiveness of quotes.
Electricity costs and your business financial health
Energy suppliers may review company information before offering a contract. This can include how long your business has been trading and whether payments have been made on time. If electricity bills are missed or fall into arrears, it can signal financial stress. Over time, these factors will affect your business credit score and how other providers, including lenders, view your company. Managing electricity costs is therefore part of managing financial risk. Predictable bills support healthier cash flow, which can make it easier to apply for a business loan or focus on securing funding when opportunities arise.
How Capitalise can help your business
Reducing electricity costs is one practical way to protect cash flow, but it’s only part of the bigger picture. Capitalise helps small businesses understand their financial position by giving visibility over their business credit score and supporting smarter decisions. By monitoring your business credit score through our platform, you can see how consistent financial management affects how lenders and suppliers view your business. A healthy credit profile can help when securing funding or negotiating better terms for day-to-day operations. And if high energy costs are putting pressure on working capital, we can help you explore a business loan to bridge the gap and keep growth on track.