How much could your business save?Find out now!
Or, you can call us on:0800 411 8830

Business Energy vs Domestic Energy: The Key Differences

The energy which powers your business is the same as that which powers your home, so you may assume that the commercial energy market operates in the same way as the domestic energy market. In fact, there are a number of key differences between the two. Knowing about these differences will help you understand how to find the best business energy deals, so we’ve put together a brief summary below.

Contract Length

In most cases, domestic energy contracts are rolling contracts with no definitive end date. Business energy contracts, on the other hand, are almost always fixed term deals. The fixed term is usually a period of one, two or three years, but can be as long as five years. There are some fixed price or fixed term deals available to households, but rolling contracts are most common amongst domestic customers.


Business energy prices are linked to ever-changing wholesale prices, so they change daily. Contrastingly, domestic energy prices do not shift with underlying market price changes, and are only likely to change once or twice a year.

There are a number of factors which make energy typically cheaper for businesses than households. The fact that there are much higher volumes of energy involved in business deals, for example, means that suppliers will sell it to businesses at much lower rates. Suppliers also offer bespoke prices to each business, making the market much more competitive. Conversely, domestic customers are charged the same for their energy as everyone else in their region – negotiation is not an option.

Businesses also save a lot of money on energy over time because of the nature of fixed term contracts. Their energy prices are usually fixed for the duration of their contract, meaning they’ll be unaffected by any significant rises in wholesale prices which occur during that period.

VAT and Climate Change Levy

Another way in which business and domestic energy prices differ is that businesses and households pay different rates of VAT on energy. Domestic energy rates are subject to 5% VAT while business energy rates are subject to 20% VAT. Businesses are also required to pay the additional charge of Climate Change Levy on gas and electricity.

Cooling Off Period

After entering a domestic energy contract, there is always a cooling off period during which the customer is free to cancel that contract. However, when it comes to the vast majority of business energy contracts, there is no such safety net. Businesses are deemed fully capable of entering a contract willingly and in full knowledge of the terms, so cooling off periods are not a feature of the market.

Contract Termination

Businesses are not only denied a cooling off period – they’re usually completely unable to exit a fixed term contract any time before its end date. Domestic energy contracts can typically be ended any time because they simply keep rolling until the customer chooses to switch to a new one. Even in the less common cases where domestic customers have some type of fixed price or fixed term deal they will most likely have the option of ending their contract early for a small cancellation fee. This means that as a business owner, it’s much more important to be aware of and completely happy with the terms of any energy contract you’re about to enter.

Related Articles

the week's top energy news

The Week’s Top Energy News

Top News In Energy This Week This week we’ve seen a flurry of green energy stories – including gr...

Read More

Very Clever Commuting Hacks

It’s easy to focus on the downsides of a long commute. The average UK commuter spends 58 minutes every ...

Read More
will innovative jam boost the economy

Will ‘innovative jam’ boost the UK economy?

It’s the economic equivalent of Union Jack bunting. Today, in a move surely masterminded by the Great Briti...

Read More
Excellent, 9.4 / 10

Competent and courteous service.

"Marie was knowledgeable and helpful. I feel able to recommend the service given without reservation. David Slesenger"

This review was posted by David Slesenger on the 16th of August 2016

Good service

"Nadia was very helpful"

This review was posted by Robin on the 16th of August 2016

Excellent Customer Service *****

"Jonathan Burgess is an asset to Switch My Business. He made me feel at ease and was more than helpful at all times. He made regular contact and guided me through the whole process which made switching a breeze. I just wish there were more customer service advisers like Jonathon whose friendly and happy demeanour make your day a much nicer one. Well done Switch my business and more importantly thank you Jonathon for all your hard work! Maria Owen Lodgecrest"

This review was posted by Maria Owen on the 17th of August 2016


"I totally agree with a customer maria owen,Jonathan Burgess was such a pleasure dealing with and is truly a asset to the company, he made it very easy to switch my electricity companies, Jonathan Burgess was very helpful, easy to talk to it was like talking to a friend not just a customer adviser. I would definitely recommend switchmybusiness and try get hold off Jonathan Burgess if possible and have the same excellent service as I did. Rajan Shanan"

This review was posted by Rajan Shanan on the 19th of August 2016

Excellent and very helpful

"Arron who dealt with my switch of energy and gas has been a huge help and extremely efficienct and easy to deal with. Despite British Gas throwing obstacles in the way at every turn he has doggedly stuck to his task and saved the day. Thanks Arron."

This review was posted by Rod Pryce-Jones on the 19th of August 2016