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Is Business Electricity Cheaper than Domestic?
Having been a domestic energy customer for many years, most business owners will be familiar with how their home energy contracts work. But when it comes to contracts from business energy suppliers, they may not realise that there are key differences between domestic energy and business energy – and in this article, we will take a closer look at what these differences are.
What are the main differences between domestic and business energy?
The following points summarise the main differences between domestic energy and business energy:
- Energy unit price – Business energy tends to be cheaper per unit, than domestic energy (depending on your business electricity suppliers of course!)
- However, business energy is subject to 20% VAT while domestic energy is only 5%
- Business energy also has to take into account levies and energy regulations which domestic energy customers don’t have to worry about
- Contract terms tend to be longer for business customers than they are for domestic users
- You will generally need less information and get simple energy quotes as a domestic customer, whereas business energy quotes tend to be more complex and so need more information from you at the start
Is business energy cheaper than domestic energy?
Following on from the information above there may be business owners out there wondering, is business energy cheaper than domestic energy?
Although this seems a simple question, the answer is quite complex, and there are a number of factors that need to be taken into account. The actual electricity and gas supplied are the same for business customers as they are for domestic customers, the contracts will differ wildly for both. This is because domestic and business energy suppliers operate in different ways, and prices will vary depending on a variety of factors.
Average business energy rates vs average domestic energy rates
Electricity and gas prices may seem cheaper for business customers than they are for domestic users as businesses tend to pay a lower price per unit for their energy, due to the large volumes they consume leading them to economies of scale – so the larger the business the lower the unit rate. This means that most business owners are able to negotiate and choose contracts based on their particular needs, which is something that domestic customers are not able to do – they are just charged the same price as everyone else in their region.
But is business energy actually cheaper overall than domestic energy?
No. Not when you take into account the other charges that are then added on, such as:
- Levies such as the Climate Change Levy (CCL)
- Pricing criteria such as business size and contract length
- Price fluctuations with variable price contracts
- Wholesale energy market pricing changing at renewal
Finding the best business energy deal can be a confusing and time-consuming task. But D-ENERGi is here to help. Our team of energy experts will negotiate with business electricity and business gas suppliers on your behalf and secure you the best business energy deal.