Business Electricity Prices per kWh UK 2026: Costs by Business Size

Small UK businesses paid an average of 28.6p per kWh for electricity in the second quarter of 2026, and the smallest sites paid 38.4p. Those are the latest government figures from the Department for Energy Security and Net Zero (DESNZ). They include the Climate Change Levy but not VAT. The 24.5p national average you often see quoted is lower because large industrial users pull it down.

This guide covers electricity only. It shows the price per kWh for each business size, what a typical monthly bill looks like, and how much more you pay if your contract runs out. If you buy gas as well, our guide to total business energy costs covers both fuels together.

How we researched this guide: we took prices from the DESNZ quarterly energy price tables published on 29 September 2026. We read deemed rates from npower and E.ON Next schedules linked from each supplier’s own website, and VAT rules from HMRC Notice 701/19. We checked every figure on 8 October 2026.

How Much Does Business Electricity Cost per kWh in 2026?

Business electricity cost between 22.2p and 38.4p per kWh in Q2 2026, depending on how much a site uses. Small businesses paid 28.6p and the smallest paid 38.4p. These DESNZ prices include the Climate Change Levy and every other charge except VAT.

DESNZ groups businesses into seven size bands by yearly use. Each price is the average that band actually paid. DESNZ describes them as fully delivered prices that include all elements except VAT, so do not add a separate standing charge on top. Use the band that matches your yearly use, which is on your bill or annual statement.

Source: DESNZ tables 3.4.1 and 3.4.2, Q2 2026 (April to June), provisional. DESNZ will publish the next update on 17 December 2026. It has also flagged that the very small band was revised from late 2024 and may change again.

A megawatt hour (MWh) is 1,000 kWh. A site using 15,000 kWh a year is in the very small band. One using 50,000 kWh is in the small band.

What Will Your Monthly Business Electricity Bill Be?

A business using 15,000 kWh a year pays about £575 a month at the DESNZ very small rate, once VAT is added. At 50,000 kWh the bill is about £1,430 a month. At 150,000 kWh it is about £4,289 a month.

Here is the maths for the middle row. 50,000 kWh at 28.59p comes to £14,295 a year. Adding 20% VAT makes £17,154. Divide by 12 and you get about £1,430 a month. These are band averages, not quotes. Your own price depends on your region, your meter, when you signed and how long you fixed for.

Each example uses more than 33 kWh a day, so the full 20% VAT applies. Very small sites can pay less VAT, as the VAT section below explains. To work out your own figure, try our business energy cost calculator.

What Do Out-of-Contract (Deemed) Electricity Rates Cost?

Deemed rates ran from 37.2p to 46.0p per kWh in autumn 2026 at npower and E.ON Next, before VAT and CCL. That is roughly 9p to 18p more per unit than the DESNZ small-business average, plus a standing charge.

A deemed rate is the price your supplier charges when you use electricity without a signed contract. That happens when a fixed deal ends and you have not renewed, or when you move into new premises. Ofgem says deemed rates are usually higher than negotiated contract rates. The schedules below are the suppliers’ own published prices.

Prices are for standard (non-half-hourly) meters and exclude VAT and CCL. The range runs from the cheapest region to the dearest. London is 37.222p at npower and 42.0p at E.ON Next. North Scotland is the highest at both suppliers.

Here is what that means for a business using 50,000 kWh a year in London, before VAT and CCL. At the DESNZ small-business average of 27.87p, the year costs about £13,935. On npower’s deemed rate it costs about £19,169, including the standing charge. On E.ON Next’s deemed rate it costs about £22,095. That is about £5,200 to £8,200 more for the same electricity.

What Is Included in the Business Electricity Price per kWh?

Your price per kWh covers the wholesale electricity plus network and policy costs. On top come the Climate Change Levy, a daily standing charge and VAT. The DESNZ band prices already fold in everything except VAT.

Supplier schedules show what sits inside the unit rate. npower’s deemed prices, for example, include transmission and distribution network charges and losses, balancing costs, and the Renewables Obligation, Feed-in Tariff, Contracts for Difference and Capacity Market schemes. They exclude reactive power and the Climate Change Levy.

Standing charges

A standing charge is a fixed daily fee you pay even if you use no electricity. No government survey publishes average business standing charges, and there is no price cap for business energy. They vary by supplier, meter and network band. The deemed schedules above show how wide they can be: from 131.649p to 838.657p a day at npower, depending on network band.

Compare the total yearly cost, standing charge included, rather than the unit rate alone. A low unit rate with a high standing charge can cost a small user more. Some suppliers also offer tariffs with no standing charge.

Climate Change Levy

The Climate Change Levy (CCL) is a tax on business energy. The main rate for electricity is 0.801p per kWh from 1 April 2026, rising to 0.827p from 1 April 2027. Businesses with a climate change agreement get a 92% discount on the electricity rate.

Do Businesses Pay 20% VAT on Electricity?

Most businesses pay 20% VAT on electricity. Sites using no more than 33 kWh a day, or 1,000 kWh a month, pay the reduced rate instead. Your bill shows which rate your supplier charges.

The small-use rule comes from HMRC VAT Notice 701/19. The limit applies to each of your premises separately. 33 kWh a day works out at about 12,000 kWh a year, so only the smallest sites qualify.

From 1 October 2026 to 31 March 2027, the government has set a temporary 0% rate in Great Britain for domestic electricity and other qualifying-use supplies. Qualifying use means domestic use or a charity’s non-business use. HMRC’s notice does not say in terms that small business supplies are included, so ask your supplier before you count on it. Northern Ireland stays at 5%.

How Have Business Electricity Prices Changed Since 2021?

Small-business electricity cost 27.87p per kWh in Q2 2026, up from 14.09p in Q2 2021, excluding CCL. Prices have barely moved in the past year for small businesses, while very small sites paid about 1.3p more.

DESNZ figures show the small-business price nearly doubled between 2021 and 2026. It has been flat for the past year. Across all businesses, DESNZ reports the average price including CCL rose 2.0% on the year to Q2 2026.

Prices per kWh, excluding CCL and VAT. Source: DESNZ table 3.4.1.

How to Lower Your Business Electricity Price

The biggest saving is avoiding deemed rates by fixing a new contract before your old one ends. After that, compare total yearly cost across suppliers, check what any broker is paid, and use less at peak times.

1. Renew before your end date. On the figures above, a 50,000 kWh business can pay thousands more on deemed rates. Start comparing a few months before your contract ends.
2. Compare total yearly cost. Ask each supplier for the unit rate and the standing charge, then work out the year’s total at your usage.
3. Know what a broker earns. For contracts signed since 1 October 2024, Ofgem requires broker fees to be shown in the contract’s principal terms. Our list of UK business energy brokers explains how they are paid.
4. Check if you are a microbusiness. You qualify if you use up to 100,000 kWh of electricity a year, or have fewer than 10 staff and turnover up to £2 million. Microbusinesses get extra protections on notice periods and renewal prices.
5. Use less, especially at peak times. Our office energy use guide shows where electricity goes in a typical office. Larger sites can also look at commercial solar panels.

Last updated: October 2026. Prices checked against DESNZ, npower, E.ON Next, HMRC and Ofgem on 8 October 2026.

Tom Reynolds

Business Energy Specialist

Tom focuses on commercial energy, renewable adoption, and sustainability strategy for SMEs. His background with UK energy suppliers helps businesses cut costs while meeting carbon targets.

Reviewed by

Laura Bennet

Home Energy & Sustainability Editor