Businesses of all sizes rely on gas and electricity to keep the lights on, but it’s not always easy to see how much that energy should cost.
The business energy market is much more complex than the domestic market. This can lead to businesses allowing contracts to roll over to avoid the hassle of switching suppliers.
To help businesses make sense of how much they should be paying for their gas and electricity, Business Energy have taken a look at the average costs and how businesses can reduce energy bills.
As with domestic energy, the two main aspects of energy costs are the unit rate and standing charges.
The unit rate is the cost of each unit of energy used, measured in kilowatt hours (kWh) of energy. A standing charge is a fixed daily cost which will not change, regardless of how much gas or electricity you use.
The cost of business gas and business electricity can vary depending on a variety of factors. The size of a business, the number of people it employs, and the type of service provided can all impact the cost of business energy.
With so many factors involved, it can be impossible to predict how much business gas and business electricity will cost on an individual basis. However, we’ve broken down the average costs for the common business types.
A micro-business is defined as having between 1 and 9 employees. In most cases, overheads for micro-businesses are likely to be fairly low.
Micro-businesses have an average electricity consumption of 7,500 kWh and an average gas consumption of 5,000 kWh. At this usage, the average micro-business energy bill would be £1,518 per year.
A small business is classed as having between 10 and 49 employees. According to the latest government figures, there are over 200,000 businesses employing between 10 and 49 people.
The average electricity consumption for small businesses is 20,000 kWh with average gas consumption coming in at 15,000 kWh. This usage would give small businesses an average yearly energy bill of £3,664.
Medium-sized businesses are classed as having between 50 and 250 employees. Energy usage is likely to vary significantly for medium-sized businesses, so it is important bear that in mind when comparing energy costs.
The average energy consumption for medium-sized businesses is 35,000 kWh for both gas and electricity. At this usage, the average energy bill for a medium-sized business would be £6,563 per year.
Large businesses are defined as any business with over 250 employees. Once again, energy costs for large businesses will vary depending on the number of employees, type of business, and type of premises.
Large businesses have an average electricity consumption of 90,000 kWh and an average gas consumption of 75,000 kWh. The average energy costs for a large business at this usage would be £15,609.
It appears that an ideal place to start for businesses aiming to save on their energy bills could be reducing energy waste.
A report from think tank Green Alliance found that businesses across just 5 UK cities are paying around £60 million a year in unnecessary energy bills as a result of energy being wasted.
In the City of London alone, the energy wasted by businesses could be used to power up to 65,000 homes. There is also a serious environmental impact with the energy wasted in the City of London with the carbon emissions equivalent to those produced by 46,000 cars annually.
Taking simple steps such as installing energy saving light bulbs, reducing paper use, upgrading appliances, and switching everything off at night can help businesses save energy and reduce their bills.
Despite the potential savings on offer, many businesses are reluctant to switch their energy supplier.
The fastest way for businesses to reduce their energy bills is often to switch supplier for a better deal. However, many businesses are still reluctant to switch their energy supplier.
In fact, recent research has found that half SMEs won’t switch their energy supplier with 51% considering the process to be too complicated.
22% of SMEs believed that switching supplier would be too expensive and incredibly, 51% said switching energy supplier is harder than a tooth extraction or firing people.
With businesses believing switching energy supplier is worse than pulling teeth, many may be left overpaying for their energy bills.
Businesses who have not renegotiated their energy deal could be on out of contract rates. These rates are often significantly higher than the typical rate offered when agreeing a new energy deal.
By comparing energy quotes, businesses can quickly find out just how much they can save on their gas and electricity bills.
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Percentage energy savings quoted are against customers who let their last contract renew automatically.