Compare Energy Tariffs

Get a comparison & start saving now!

The definitive guide to kWh pricing for businesses

When switching energy suppliers, understanding your gas and electricity cost per kWh is essential.

Your cost per kilowatt hour (kWh) is the key to how your energy bills are calculated. Knowing your kWh costs and usage will help you find the best energy deals on the market.

In this guide, we explain all you need to know about gas and electricity prices per kWh.

Contents

      1. Average business electricity prices per kWh
      2. Average business gas prices per kWh
      3. What is a kWh?
      4. How may kilowatt hours does a typical business use?
      5. Why are the other costs involved in business energy prices?
      6. What can affect my business energy prices per kWh?
      7. How can I find the best gas and electricity prices?
      8. Gas & Electricity prices per kWh FAQs

What are the average business electricity prices per kWh?

The average cost of business electricity in 2020 is 13.93 pence per kWh. However, average electricity prices will vary depending on the size of your business.

Here, you can find the average electricity cost per kWh by business size:

  • Micro business – 16.74 pence per kWh
  • Small business – 14.83 pence per kWh
  • Medium-sized business – 13.68 pence per kWh
  • Large business – 12.93 pence per kWh

Here’s an example of an annual small business electricity bill:

Annual electricity usage (kWh)

20,000

Average unit cost (per kWh)

14.83p

Daily standing charge

26.83p

Subtotal

£3,063.93

VAT (20%)

£612.79

CCL (0.847p per kWh)

£169.40

Total

£3,846.12

If you use a lot of business electricity, you may be able to negotiate cheaper prices per kWh. The more energy you use, the lower your unit rate is likely to be.

What are the average business gas prices per kWh?

The average cost of business gas in 2020 is just under 2.495 pence per kWh. Once again, your unit price will depend on the size of your business.

Here, we’ve provided the average gas cost per kWh by business size:

  • Micro business – 3.925 pence per kWh
  • Small business – 2.303 pence per kWh
  • Medium-sized business – 2.228 pence per kWh
  • Large business – 1.925 pence per kWh

Here’s a breakdown of an average annual small business gas bill:

Annual gas usage (kWh)

15,000

Average unit cost (per kWh)

2.303p

Daily standing charge

26.83p

Subtotal

£443.38

VAT (20%)

£88.68

CCL (0.339p per kWh)

£60.90

Total

£592.96

What is a kWh?

Now we know the average prices, what is a kWh? A kilowatt hour is a unit of measurement for energy usage. It’s based on the equivalent in power consumption to using one thousand watts for one hour.

For example, an appliance that used 1,000 watts of energy would take an hour to reach one kWh. An appliance of 10 watts would take 100 hours to use the same amount of energy.

How many kilowatt hours does a typical business use?

What’s ‘normal’ when it comes to commercial energy consumption depends on the size of your business. For example, the average energy consumption for a micro business is between 5,000 and 15,000 kWh per year. At the low end of the scale, that’s not much more than the average household.

On the other hand, medium-sized businesses might use up to 65,000 kWh per year. Large businesses like factories can use as much as 20 million kWh annually!

What matters more is how much you pay for each unit of energy you use.

What are the other costs involved in business gas and electricity prices?

As you can see in the pricing examples above, there’s a range of costs that make up your business energy bill.

The first is your standing charge which is paid at a daily set rate. You will be required to pay standing charges regardless of how much energy you use on a given day.

If you want to avoid paying a daily fee, you can sign up to a no standing charge tariff. However, you should bear in mind that these tariffs can come with increased unit rates.

Taxation costs make up the remainder of your business energy bill. This includes VAT paid at a rate of 20% and the Climate Change Levy (CCL).

The Climate Change Levy is an additional government tax. Businesses are required to pay the CCL on electricity, gas, and solid fuels like coal and petroleum.

When comparing business energy prices, it’s important to factor in all costs involved. A tariff with the cheapest prices per kWh is not always the best value deal.

What can affect my business energy prices per kWh?

Not all businesses will pay the same unit price for the energy they use. Higher users of energy will often pay a lower rate than smaller businesses.

There are several factors which can affect your gas and electricity unit price, including:

  • Your business type
  • How much energy you use
  • Whether you own a small business or large corporation
  • If you use both gas and electricity
  • The region your business is located
  • The length of your energy contract
  • The wholesale costs of gas and electricity

How can I find the best gas and electricity prices?

The good news is that there are ways to reduce your business energy prices per kWh.

If your business energy contract is coming to end, it’s vital to compare gas and electricity quotes. You can then make sure you’re on the best deal for your business.

Prices quoted in your renewal letter will often be much higher than those available to new customers.

With Love Energy Savings, you can search the latest business energy prices online in seconds. All we need from you is your address and a few contact details.

Switch your energy supplier with Love Energy Savings

With Love Energy Savings, the switching process couldn’t be simpler. All you need to do is choose the tariff that's right for you.

Our dedicated account managers will then take care of the entire switching process for you. We'll liaise with your new and old suppliers to make your switch as simple as possible.

To find the best deal for you, simply complete our online energy comparison tool.

We’ll find a quote to suit your business energy budget in no time!

Gas & Electricity Prices Per kWh FAQs

How can I find out if I’m paying too much for my gas and electricity?

The quickest way to find out if you're paying too much for your gas and electricity is to compare energy prices.

The average prices per kWh are 13.93p for electricity and 2.495p for gas. However, these will not be the cheapest rates available.

If it’s been a few years since you switched, you will likely be paying too much for your gas and electricity.

Do wholesale energy prices per kWh affect my unit rate?

Wholesale energy prices per kWh can vary on a weekly or even daily basis. On average, around half of a business energy customers bill is made up of the wholesale energy costs.

Changes in the price of wholesale gas and electricity can affect your business energy bill.

Those on a variable rate tariff are most likely to be affected. If your business is on a fixed rate tariff, changes in wholesale prices will not affect your unit rate.

Wholesale prices have fallen in recent years. The average wholesale electricity prices per kWh are currently at around 3 pence per kWh. The latest wholesale gas prices stand at around 0.5 pence per kWh.

Why does the price of energy per kWh vary between regions?

When the UK imports energy, it imports from Europe. Most of this energy comes into London before it is distributed to the rest of the UK. This means London is the first to get energy, so less of it is needed to generate each kWh of output. 

Regions like Wales and Scotland are further away from the source of energy. When energy is transported, some of it is lost.

The further that energy must travel, the more is wasted in the process. Some power stations in regions like Scotland and Wales can make up for the energy loss. However, these regions will still pay more overall.

Which supplier offers the cheapest prices per kWh?

Your unit cost depends on several factors unique to your business. So, the cheapest energy supplier for one business may not be the cheapest supplier for another.

This means that there is no cheapest supplier for all businesses. The quickest way to find the best energy supplier for you is to compare energy prices online.