Comparing business gas prices can be tricky. Unlike the domestic market, gas for businesses is a lot less predictable and dependant on more factors. So it’s important to understand what’s involved before you commit to a contract.
Signing a cheaper commercial gas tariff can have a material impact on your profitability, allowing you to put additional capital to work elsewhere.
If you’re ready to request quotes, you can do so by filling out the form on the top of this page. Someone in the team will call you right back.
Main Topics
Business Gas Prices UK*
The comparison table below outlines the average rate per unit for different sized UK companies:
| Business Size | Price Per kWh (pence) |
|---|---|
| Very Small | 6.025 p/kWh |
| Small | 2.501 p/kWh |
| Medium | 1.921 p/kWh |
| Large | 1.427 p/kWh |
| Very Large | 1.306 p/kWh |
| Average | 2.058 p/kWh |
As you can see, the average business gas rate per kWh stands at 2.058 p/kWh.
| Business Size | Annual Gas Consumption (MWh) |
|---|---|
| Very Small | <278 MWh |
| Small | <278 - 2,777 MWh |
| Medium | 2,778 - 27,777 MWh |
| Large | 27,778 - 277,777 MWh |
| Very Large | 277,778 - 1,111,112 MWh |
The graph below shows the trend in the cost of gas per kWh for businesses of different sizes from Q1 2009 to Q3 2020.
* Best Business Gas Prices from Suppliers*
| Supplier | Unit Rate (p/kWh) | Standing Charge (p/day) | Annual Cost* |
|---|---|---|---|
| British Gas | 3.138 | 70.2 | £1,009.35 |
| SSE | 3.788 | 27.397 | £1,009.12 |
| Utilita | 3.556 | 12.257 | £898.18 |
| Gazprom Energy | 3.491 | 20 | £910.84 |
| EON | 4.4 | 30 | £1,165.50 |
| Opus Energy | 4.03 | 24 | £1,054.80 |
| EDF Energy | 3.4 | 25 | £907.25 |
| Scottish Power | 3.33 | 25 | £890.45 |
| Octopus Energy | 3.32 | 21.66 | £875.86 |
| Yu Energy | 2.698 | 50 | £830.02 |
* Figures are correct as of writing (January 2021). All prices are for 12 month fixed contracts. We contacted each business gas supplier and received a quote for a business consuming 24,000 kWh per year in London (inside A406). Rates are exclusive of CCL & VAT charges.
What Factors Affect Business Gas Rates?
Business gas prices can be cheaper than their domestic equivalent. The overall cost mainly depends on where you are located and how much gas your business utilises.
However, the easiest way to lock in the best rates is to simply compare quotes.
Here are the factors that have an impact on the tariffs you receive.
Wholesale Cost
Suppliers buy ‘raw’ gas in large quantities from the energy markets where prices are constantly changing. This is known as the ‘wholesale cost’ which makes up the majority of your gas unit charge.
Standing Charge
There is a standing charge for business gas much like electricity. There are a few components to this including:
- Transportation Costs – The cost of transporting gas to various parts of the UK can have an impact on the pricing you are offered by your power company.
- Energy Loss – Naturally within the distribution process, energy moves across physical infrastructure and small amounts are lost. This amount is added to your bill as a small percentage, usually around 1%.
Location & Transportation Charges
So, why do prices differ across the UK? This is due to the standing charge which incorporates the transportation expense. Distribution can be either cheaper or more expensive depending on your location.
Interestingly, you would expect a remote area such as the North of Scotland to be more expensive (it’s one of the most expensive for electricity). However, some areas are subsidised by other areas in order to cater to such places.
Due to the unique nature of all of these factors, the price of commercial gas tariffs is harder to compare like-for-like between regions. We detail some of the estimated benchmarks further down on this page.
Fixed vs Variable Gas Tariff Types
There are different types of tariffs for the commercial gas market, the most common are:
- Fixed-Rate Gas Tariff – Probably the best way for most business to lock in cheap business gas prices, the fixed contract offers one unit rate with the standing charge increasing over the term. If you’re looking to renew your agreement and find a much better rate, go ahead and lock it in for 1-4 years.
- Variable-Rate Gas Tariff – This variant comes with some risk as your unit charge (p/kWh) can move up and down according to the commodity market fluctuations.
Deemed Rates
Deemed or ‘out-of-contract’ rates are rolling contracts that your agreement defaults to when you do not have a tariff in place. These rates are generally higher and it’s advised that you avoid them where possible.
Climate Change Levy Charge
Business gas is levied with a charge from the government which is passed through from your supplier. The CCL charge for gas currently stands at 0.339p/kWh (January 2021). Do note, that after 1 April 2021 the rate will increase by ~20% to 0.406p/kWh.
VAT Charge
VAT on business gas is charged at a standard rate of 20%. Businesses that fall under the ‘de-minimis’ category have a reduced rate of 5%. The reduced rate is applicable to businesses using less 4,397 kWh or less of gas per month.
Regional Differences in Commercial Gas Prices*
The table below shows the regional differences in business gas prices per kWh. As you can see, North East England along with Yorkshire are some of the cheapest at 3.08 p/kWh. Areas of Southern England and South West England some of the most expensive parts at 3.35 p/kWh. A difference of ~8.7%.
| Region | Gas (pence per kWh) |
|---|---|
| North East England | 3.08 |
| Yorkshire | 3.08 |
| East Midlands | 3.11 |
| East England | 3.12 |
| South Wales | 3.13 |
| North West England | 3.15 |
| North Scotland | 3.15 |
| South Scotland | 3.15 |
| North Wales, Mersey & Cheshire | 3.20 |
| London | 3.25 |
| West Midlands | 3.26 |
| South East England | 3.30 |
| Southern England | 3.35 |
| South West England | 3.35 |
* Data sourced from Bulb. These figures are to be used as rough guidance, quotes may differ and prices are ultimately decided by the gas supplier.
Getting Cheap Business Gas Quotes
Here are a few tips when requesting quotations from a new business gas provider:
- Have your MPRN (Meter Point Reference Number) to hand. This is your 11-digit number a potential supplier can use to look up your consumption habits.
- Duel-Fuel – You may want to consider combining your business gas and electricity contracts to one supplier for better rates.
- Contract Renewal Date – Stay on top of this and ensure you are not rolled onto deemed rates.
Business Gas FAQ
Business Gas FAQ
Is business gas cheaper than domestic?
Generally, commercial gas supplies cost less than domestic gas. But, the price of gas depends on the contract you have with your supplier. However, the charges also depend on your company’s size and the amount of gas used in your business.
Usually, most commercial gas customers also pay a higher VAT rate (20%), whereas domestic customers pay 5% VAT. In addition to this, companies pay a Climate Change Levy environmental tax for mains gas, which is currently 0.465p/kWh. In comparison, the Levy for LPG is 2.175p per kWh. You can find more about this on the UK Government website.
How much gas does a small business use?
The amount of gas used in the course of your work depends on what your business does. For example, if most of your gas heats a couple of small offices, then you won’t use much. In comparison, a factory that uses large space heaters or large gas ovens will burn much more.
In general, for energy use purposes, businesses can be grouped into categories depending on how much gas they use:
- Very small businesses use less than 278,000kWh per year.
- Small businesses use from 278,000 to 2,777,000kWh per year.
- Small to medium business use from 2,778,000 to 27,777,000kWh per year.
Which category does your business belong to?
How can I get cheaper business gas rates?
The best way to get cheaper gas for your business is to arrange a fixed-term business gas contract. If you have one of these, then the gas price is fixed throughout the contract’s term. Often, fixed-term contracts can work out to be around 60% cheaper than other price plans. However, this might or might not be useful for your company, because gas prices can decrease and increase over the term of the contract. Alternatively, you can choose a variable price contract, which allows the price to rise or fall with the market.
Before you decide to go for one or the other, always ask for advice from a professional, and read the small print on the contract before you sign.
An alternative way to find cheaper commercial gas is to switch to another gas provider. Often, independent suppliers can offer much more affordable rates than the big six energy suppliers. However, once again, ask a professional for advice before committing yourself. The easiest way to do this is to complete the form on this page. Then, we can put a company in touch, who can deal with you, one-to-one.
Who is the cheapest business gas supplier in the UK?
There is no right or wrong answer to this question. Every business has different circumstances and needs varying amounts of gas. Furthermore, gas companies often offer special discounts for new customers and change these regularly. Therefore, the best way to find the cheapest supplier for your company is to use a professional broker who constantly monitors gas prices offered by the various providers. Complete the form on this page, and we can put you in touch with up to four professional companies that can provide this service
Next Steps
If you’re looking for a business gas price comparison in your area, simply fill out the form at the top of the page and we will put you in touch with approved commercial energy gas suppliers.