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Posted: Fri 21st Aug 2026
Last updated: Fri 21st Aug 2026
6 min read
Gone are the days of choosing a business energy tariff based solely on price.
Today, your small business has access to a wider range of energy tariffs than ever before, each designed to suit different types of operations and patterns of energy use.
The challenge is no longer just finding the cheapest tariff. It's finding the one tariff that works best for your business and a supplier that matches your vision and can support your business's growth.
If you operate from a dedicated commercial property, such as a shop, office, workshop or warehouse, you'll usually need a business energy contract.
If you run your business from home, you may also qualify for a business energy tariff if your energy consumption meets certain microbusiness criteria.
Business energy contracts differ from domestic ones in a few important ways. They are typically subject to the following rates:
VAT at 20%, although some low-usage businesses may qualify for the reduced rate of 5%. The government has announced a reduction of VAT on domestic electricity to 0% from 1 October 2026 to 31 March 2027.
Climate Change Levy (CCL), a government tax designed to encourage organisations to improve energy efficiency and reduce their consumption.
If you're not sure whether you need a business energy contract, read our blog for more information. Ofgem also provides useful guidance for small businesses.
Energy costs have remained a significant concern for businesses since the energy crisis of 2021. As a result, many firms are paying closer attention to how they buy and manage energy.
At the same time, growing interest in sustainability, renewable generation and smarter energy management has encouraged suppliers to expand their range of tariff options to meet evolving needs.
The result is a market that offers more choice than ever before, but also more complexity.
Understanding the different types of tariff can help you make a more informed decision and potentially reduce costs over the long term.
But before you begin your search, it's also important to understand your energy usage and needs.
Your small business will likely have access to the following:
With a fixed-rate tariff, your unit rate and standing charge remain the same throughout the contract term.
This option can provide certainty and make budgeting easier, which is why it's often popular with small businesses.
However, most fixed-rate tariffs include exit fees if you leave before the contract ends.
These tariffs are linked to wholesale energy market prices, meaning your rates can go up or down during the contract.
This may suit your business if you're willing to accept some risk in exchange for the possibility of benefiting from falling market prices.
Many variable tariffs also offer greater flexibility, with no exit fees.
A deemed tariff is usually applied automatically when you move into a new business premises and have not yet agreed a contract with an energy supplier.
These tariffs are often among the most expensive available, so it's worth reviewing your options and arranging a suitable contract as soon as possible.
These tariffs offer different electricity rates depending on what time of day you consume energy.
Businesses that can shift energy-intensive activities to off-peak periods may be able to make savings.
If you can't easily adjust your operating hours, technology such as battery storage may help you unlock some of these benefits.
As the name suggests, these tariffs remove the daily standing charge.
While this can be attractive for businesses with lower energy usage, it's important to remember that the unit rate is often higher to compensate.
The overall value will depend on your individual consumption patterns.
If your business generates renewable electricity through technologies such as solar panels, the Smart Export Guarantee (SEG) allows you to receive payments for excess electricity exported back to the grid.
If your business invests in on-site renewable generation, SEG payments can provide an additional source of value.
These are designed to match your energy consumption with electricity generated from renewable sources such as wind or solar power.
These can be a good option if you're looking to reduce your environmental impact and support your sustainability goals.
As with any product, it's worth reviewing the supplier's claims carefully and understanding exactly what is included.
The best tariff depends on several factors, including your:
industry
operating hours
energy usage patterns
appetite for risk
A tariff that delivers value for a retail business may not be right for a manufacturer, hospitality venue or professional services firm.
That's why understanding the different options is the first step. The next is identifying which one aligns with how your business actually uses energy.
When's the right time to switch tariff? Find out more
Want help deciding which tariff is right for your business?
Join EDF's energy expert Martin Paice on 3 September 2026 for a practical lunch-and-learn session exploring the key business energy tariffs available today.
During the webinar, you'll learn:
the pros and cons of different tariff types
which options may suit different industries and business models
how to avoid common mistakes when choosing a contract
You can also get answers to your questions during a live Q&A clinic.
As an added bonus, registered attendees will also receive a free Small Business Tariff Navigator Guide.
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