Business Electricity Charges Explained 2026: 27.2p

Last updated: Sunday 1 November 2026

A business electricity bill is built from two main charges, a unit rate for each kWh and a daily standing charge, plus Climate Change Levy and VAT. For a small business, Bionic’s October 2026 averages are 27.2p per kWh and 118.9p a day, or about £5,874 a year at 20,000kWh, as listed on 1 November 2026. Wholesale energy is the biggest part of the unit rate, with network, environmental and supplier costs making up the rest. For a 30-bed care home using around 150,000kWh, every 1p on the unit rate is worth about £1,500 a year. This SwitchSquid guide explains each line on the bill, with care home and HMO examples, so you can check a quote properly. If you request quotes through the buttons on this page, SwitchSquid may earn a commission from the supplier you choose, and it does not add a separate fee.

Sources: Bionic business electricity prices, DESNZ non-domestic energy prices, British Gas Business: how billing works, GOV.UK Climate Change Levy rates, HMRC VAT on fuel and power and Ofgem non-domestic billing transparency guide, as listed on 1 November 2026.

Business electricity charges at a glance

Unit rate: what you pay per kWh

The unit rate is the biggest part of most business bills. Bionic’s October 2026 averages are below, as listed on 1 November 2026:

Government figures give a wider view. DESNZ’s non-domestic price statistics for April to June 2026 put the average for very small businesses at 38.36p per kWh and small businesses at 28.59p, including CCL. Prices differ because of when a contract was signed, the meter type and whether the business is out of contract. Our business electricity prices per kWh guide tracks these figures.

What makes up the unit rate

Ofgem’s billing transparency guide groups the costs behind a business bill into wholesale energy, network and metering costs, environmental and social schemes, third-party fees, taxes and supplier operating costs. British Gas Business publishes an example for a 10MWh customer (September 2024):

• Wholesale energy: 44% of the unit rate and 39% of the total bill.

• Network costs: 20% of the unit rate, but 82% of the standing charge, and 27% of the total bill.

• Environmental schemes: 23% of the unit rate and 20% of the total bill.

• Operating costs: 7% of the unit rate and 17% of the standing charge.

• Third-party costs: 6% of the unit rate, which can include broker commission.

In that example, wholesale energy is 39% of the total bill. That is why the timing of a fixed contract matters so much: you lock in the wholesale price on the day you sign.

Standing charge: the fixed daily cost

The standing charge covers costs that do not depend on how much you use, mostly network and metering. It is charged every day, even when the building is empty. The British Gas example shows network costs make up 82% of it. Bionic’s small business average of 118.9p a day adds about £434 a year before VAT. For sites with low use, such as HMO communal lighting, the standing charge can be a large share of the bill. Our business electricity standing charge guide compares suppliers.

Larger sites with half-hourly meters may see extra lines for network and capacity costs. Our half-hourly meter guide explains how they work.

Climate Change Levy and VAT

CCL is charged on business electricity at 0.801p per kWh from 1 April 2026, rising to 0.827p from April 2027, according to GOV.UK. Energy used for domestic purposes is not charged CCL, and businesses with a Climate Change Agreement get a 92% discount on electricity. Our Climate Change Levy guide covers the exemptions.

VAT on business electricity is 20% as standard. HMRC treats supplies of up to 1,000kWh a month (about 33kWh a day) as de minimis, charged at the reduced rate. In Great Britain, qualifying use, such as domestic or residential accommodation and charitable non-business use, is charged at 0% from 1 October 2026 to 30 June 2027, then 5%. In Northern Ireland the reduced rate stays at 5%. Many care homes qualify for the lower rate on the residential part of their supply, which our care home VAT guide explains. HMO landlords should check our HMO electricity VAT guide.

Care home example: 30 beds

A common rule of thumb is around 5,000kWh of electricity per bed a year, so a 30-bed care home might use about 150,000kWh. At Bionic’s small business averages of 27.2p per kWh and 118.9p a day, that is about £40,800 in unit costs and £434 in standing charges, or around £41,234 a year before CCL and VAT. A 1p difference in the unit rate is worth about £1,500 a year, while a 10p difference in the daily standing charge is worth about £37.

For a care home, the unit rate matters far more than the standing charge. Our care home energy costs per bed guide and care home energy page go further.

HMO example: six-bed house with a landlord supply

A six-bed HMO where the landlord pays for the electricity might use about 9,000kWh a year. At Bionic’s micro business averages of 28.4p per kWh and 58.0p a day, that is about £2,556 in unit costs and £212 in standing charges, around £2,768 a year before VAT. A 1p difference in the unit rate is worth about £90 a year, so the standing charge and contract terms matter relatively more than for a care home. Our HMO landlord energy page and HMO energy costs per room guide have more detail.

Contract type changes the charges

• Fixed contract: unit rate and standing charge are set for the term, usually one to five years.

• Out-of-contract rates: if your fixed term finishes and you do not agree a new one, suppliers can move you to higher rates. See our out-of-contract rates guide.

• Deemed rates: if you move into premises and use energy without a contract, you pay deemed rates until you agree one. See our deemed rates guide.

Business energy contracts have no cooling-off period once agreed, so check the unit rate, standing charge, term and any broker fee before you sign. Ofgem has required suppliers to show any broker fees in contract terms for all non-domestic customers since 1 October 2024. Our broker fees guide explains what to ask for.

Fit summary

• High-use sites such as care homes: focus on the unit rate, as 1p can be worth £1,500 a year or more.

• Low-use sites such as HMO communal supplies: compare the standing charge as closely as the unit rate.

• Residential or charitable use: check whether you qualify for the lower VAT rate and CCL treatment.

• Out of contract or on deemed rates: compare as soon as possible.

Want help reading a bill? Ask Squid AI, SwitchSquid’s assistant, or use our contract end checker.

Important conditions

• Average prices are Bionic’s October 2026 averages and DESNZ statistics for April to June 2026, as listed on 1 November 2026. Your quote will depend on your usage, meter, location and credit check.

• The cost breakdown is British Gas Business’s published example for a 10MWh customer and will vary by supplier.

• The care home and HMO figures are SwitchSquid illustrations, before CCL and VAT.

• VAT and CCL treatment depends on how the energy is used and the declarations you give your supplier.

• Business energy contracts have no cooling-off period.

Final decision card

Business electricity charges come down to the unit rate, the standing charge, CCL and VAT. For a small business the October 2026 averages are 27.2p per kWh and 118.9p a day, as listed on 1 November 2026. Main limitation: these are averages, and the only way to know your own price is a quote on your real usage. Compare at least six months before your contract finishes, and check every line, not just the headline rate.

FAQ

What charges are on a business electricity bill?

The main charges are the unit rate per kWh and a daily standing charge. On top of those, most businesses pay Climate Change Levy and VAT. Some bills also show network or capacity charges for half-hourly metered sites.

What is the average business electricity unit rate?

Bionic’s October 2026 averages show 27.2p per kWh for small businesses and 28.4p for micro businesses. DESNZ figures for April to June 2026 put small businesses at 28.59p including CCL. Your own rate depends on your usage and contract.

Why is my business standing charge so high?

Most of the standing charge covers network and metering costs, which suppliers pass through. It can also vary by supplier and contract type. Comparing quotes is the best way to see whether yours is high for your site.

Do care homes pay VAT on electricity?

Many care homes qualify for the lower VAT rate on electricity used for residential purposes. In Great Britain that rate is 0% from 1 October 2026 to 30 June 2027, then 5% from 1 July 2027; in Northern Ireland it stays at 5%. You usually need to give your supplier a VAT declaration.

How much is the Climate Change Levy on electricity?

CCL is 0.801p per kWh from 1 April 2026 and is due to rise to 0.827p from April 2027. Energy for domestic use is not charged CCL. Businesses with a Climate Change Agreement get a 92% discount.

Are broker fees included in my unit rate?

Often, yes. Broker commission is usually added to the unit rate or standing charge. Ofgem has required suppliers to show any broker fees in contract terms for all non-domestic customers since 1 October 2024.

Can I cancel a business electricity contract after signing?

Business energy contracts have no cooling-off period, so once agreed you are usually tied in for the term. Leaving early can mean exit fees. Check every charge before you sign.