You didn't go into business to wrestle with energy bills.
Understanding contract options, finding the right supplier, deciding whether (or when) to fix your rates, and keeping up with rising prices can feel like a lot.
Nearly three in 10 UK businesses reported struggling with their energy bills in 2025, according to research by Ofgem, the UK energy regulator.
In 2026, global conflict triggered market volatility leading to even more pressure on UK energy costs.
You have enough to deal with serving your customers every day. Now this.
Troo has created this simple guide to business utilities, including gas, electricity and water to help you make sense of it all.
Whether you're a small start-up or a larger established company, understanding business energy basics can help you improve stability, make informed decisions and manage costs in this uncertain world.
In this article:
Learn about business energy tariffs, suppliers and what affects prices.
Understand what you're actually paying for on your bill.
Discover simple ways to reduce your business energy costs.
There are lots of different types of business energy tariffs. One of the main questions we hear is: should I get a fixed or flexible energy deal?
The answer depends on your specific business needs and priorities.
Fixed contracts mean the price of a unit of energy - measured in kWh (kilowatt-hour) - will not change for the duration of your contract.
Your monthly bill may go up and down each month depending on usage, but the price per kWh is locked in.
Who is it for? Businesses that prioritise stability.
Pros: No matter what happens in the world, if you’re under a fixed-term contract, your prices will not rise.
Cons: If energy prices fall, you will continue to pay the unit rate you signed up for.
Flexible contracts allow businesses to purchase smaller blocks of energy to try and find ideal times to buy.
Businesses who choose this option are not locked into contracts, but this exposes them to market volatility.
Who is it for? Businesses that can tolerate risk.
Pros: If market conditions improve, your unit rate will drop and your monthly bill will go down.
Cons: If market conditions worsen, or an energy shock hits, your unit rate will rise and your monthly bill will go up.
Other examples of business energy tariffs include:
Flex approach: Bulk buy energy in advance at competitive market rates.
Pass through: Certain elements of your energy bill can be fixed or variable.
Time-of-use: A fixed contract with two unit rates for off-peak and peak times.
Understanding your energy bill is the first step towards knowing whether your business is on the right deal. Here are some key terms you may encounter:
Standing charge: The daily fee you pay to have energy supplied to your premises.
Unit rate: This is the cost of the energy you use, measured in pence per kilowatt-hour (kWh).
Contract length (term): This is how long your agreement lasts.
Out of contract rates: These are the (usually much higher) charges you’ll pay if your contract ends, and you don’t agree on a new one.
Termination notice period: This is the amount of time you need to let your supplier know if you want to leave your contract.
Early termination/exit fees: If you leave your contract before the agreed term ends, you could face charges.
Pass-through costs: These are charges added to your bill for things like network maintenance and government levies.
Metering costs: Your contract might include fees for installing or maintaining your energy meter.
Billing type (estimated vs. actual): Your energy bill may be based on estimated readings if your meter isn’t regularly updated.
VAT and other taxes: Most businesses pay VAT on energy at 20%, but some may qualify for a reduced rate of 5%.
We have drawn up an annotated example of an energy bill so you can better understand how to read a business energy bill.
You pay your bills on time every month... but do you know what you’re actually paying for?
Less than half of your energy bill pays for the electricity, gas and water fuelling your business.
The rest? Non-commodity costs.
40% - Wholesale energy: The gas or electricity powering your business.
30% - Network costs: Charges to fund the national electricity grid, also known as transmission and distribution costs.
30% - Taxes and levies: Charges imposed by the government to support environmental policies, schemes and initiatives, plus VAT.
Business energy prices are affected by a range of factors, predominantly revolving around supply and demand factors.
If supply outweighs demand, there is more than enough to go around and prices should fall.
If demand outweighs supply, there is limited resources to go around and prices should rise.
Key supply and demand factors include:
Geopolitical events: For example, if the Strait of Hormuz is closed due to US-Iranian tensions or if critical infrastructure is damaged, supply is reduced. Wholesale energy prices will rise.
On the flip side, if supply outpaces demand, for example if conditions are ideal for solar and wind installations to generate extra supply, wholesale prices could drop.
However, wholesale costs tell less than half of the story.
The government of the day makes a choice to apply taxes and levies to every unit of energy - and when they raise them to fit in with their priorities.
Network costs are also rising, burdening every bill with additional cost.
Are you ready for some bad news? Your bill doesn’t just feel high – it is.
UK businesses pay more for their industrial energy than any other member of the International Energy Agency (IEA) where data is available, according to the Department for Energy Security and Net Zero.
Recent energy shocks affected British wholesale costs due to the fact 26.5% of our electricity was generated using gas in the 12-month period from May 2025.
Yes, that's right: when the price of gas rises, the price of electricity rises with it.
Non-commodity costs have also soared in recent years, affecting business and domestic energy customers.
Since 2015, the non-commodity portion of an energy bill has risen from around 35-40% of a business energy bill to around 60% - and that is despite much higher wholesale costs.
Charges are rising to pay for new infrastructure, including cables to connect renewable sources such as wind turbines, to the national grid for transportation around the country.
There is no such thing as a cheapest or ‘best’ business energy supplier. The right supplier depends on your specific operations and needs.
have a greater choice than you may think.
You might have heard of the 'Big Six' energy suppliers:
British Gas
EDF Energy
E.ON
Npower
ScottishPower
SSE
In 2008, they supplied over 99% of UK domestic and small business customers between them, but new challengers emerged to reshape the landscape.
Ovo Energy took over SSE’s list of customers in 2020, while E.ON Next absorbed Npower into their business and Octopus Energy powered their way through the industry to become the single largest energy supplier in the UK with around 25% market share alone.
The new Big Six still dominates the landscape with around 90% of domestic and small business customers, but there are plenty of smaller companies gaining ground.
Troo works with more than 25 suppliers of all sizes to provide the most suitable service for businesses across the UK.
There are three fundamental levers you can pull to reduce your business energy costs:
Find the right deal: Understanding your usage, unit rate and options are crucial first steps towards finding a contract that suits your business priorities.
Boost your efficiency: Using less energy - and using it smarter - means you can start bringing down your costs today.
Weigh up renewables: Wind power is the biggest source of energy generation in the UK, while solar power is becoming increasingly popular for businesses to generate energy on-site. Green tech is now a practical business tool.
This article is part of our Business Energy Basics series. Now read...
Business energy is complex. We get it. We can support you.
Troo exists to help businesses make sense of their energy needs. We simplify information and help you make smart decisions that manage costs and lead to real change.
We are not here to sell you a quick fix. We're here to understand what matters to you, offer clear advice, and take ownership of the hard parts, so energy becomes one less thing to worry about.
Book a free energy health check today for practical advice on business electricity, gas and water procurement, renewable consultancy and our ongoing management services.