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Types Of Business Energy Contracts

Read on to find out more about these business energy contract types, the cooling-off period, business energy suppliers, energy bills, and how to pick the right one for you with Business Energy Comparison.

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Business energy contracts come in many shapes and sizes. The type of contract you go for will depend on your business needs, goals, and budget. As energy bills continue to rise, thanks to the energy market, it’s important to get the best deal possible. It’s also good to take a look at the average business gas prices to compare business gas prices.

This article is here to help break down the different types of contracts available so that you can find one that works for your business. We’ll cover what an energy contract is, the main types of contracts available, where to find business energy deals, and cheap business energy prices.

Types Of Contract

Here we will talk you through the different contracts, such as deemed and out of contract, fixed, variable and rollover.

Deemed and out-of-contract

When your business energy contract comes to an end, you will be automatically moved onto a deemed or out-of-contract rates. You will also be moved to this contract if you move to a new business premises and have not agreed on a contract yet. This is usually a much higher rate than you were paying on your previous business energy contract, so it’s important to switch to a new deal as soon as possible.

Deemed rates are set by the energy supplier and can change at any time. Out-of-contract rates are also set by the supplier, but they’re usually fixed for the duration of the contract.

To avoid being charged these high rates, you need to switch to a new contract before your current one expires. You can do this by contacting your energy supplier or using an online comparison site.


Fixed-term contracts give you a set price for energy per kilowatt-hour (kWh) that you use, no matter how the market changes. This can make budgeting for your business energy costs easier, as you’ll always know how much you’re going to pay. Fixed contracts usually last between two and three years.

However, because you’re locked in at a set price, you may end up paying more than the current market rate if energy prices go down during your contract period. You may also have to pay a fee if you want to leave your contract early.


The word “variable” in energy refers to the price of energy. This type of contract means that the amount you pay for your energy each month can go up or down, in line with the wholesale price of gas and electricity (basically, it’s linked to what happens in the energy market).

If you have a variable contract, it’s important to understand how the wholesale energy markets work. The two main types of variable contracts are:

Pass-through contracts:

These contracts follow wholesale energy prices. So if rates go up, your bill does too. Conversely, if rates drop, you will also see a reduction in your monthly payments.

Fixed-price contracts:

A fixed-price contract offers protection from rising costs, as the unit price you pay per kWh is set for a certain period of time – usually one or two years. This means that even if wholesale prices rise during this period, your bill will not increase.


Rollover contracts are the most common type of business energy contract. With a rollover contract, your current supplier will automatically renew your contract at the end of the fixed term.

This can be a convenient option if you don’t want to have to think about shopping around for a new supplier, but it’s important to be aware that you may not always get the best deal this way. It’s also worth checking your contract terms carefully before signing up, as some suppliers may tie you in for longer than you initially agreed to.

If your business is a micro business, then rollover contracts won’t last more than 12 months.

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These types of contracts can be either fixed or variable. A fixed energy contract means that the price you pay for energy is locked in for a set period of time, usually between one and three years. This can give you some protection against rising energy prices. However, if energy prices fall, you may end up paying more than other businesses on variable contracts.

A variable contract means that the price you pay for energy can go up or down depending on the wholesale price of gas and electricity. This can be riskier than a fixed contract, but it also gives you the opportunity to save money if energy prices fall.

The type of contract you choose will depend on your business’s needs and preferences. You should consider how stable your energy costs need to be and whether you’re willing to take on the risk of higher prices in exchange for the potential savings of a variable contract.

Check Your Business Energy Rights

As a business owner, you have the right to choose your supplier and the type of contract that best suits your needs. You should also be aware of the different types of contracts available so that you can make an informed decision.

The most common type of energy contract is a fixed-rate contract, which means that your rate will be locked in for a specific period of time, typically one to three years. This can provide stability and predictability for your budget. However, if energy prices go down during your contract term, you may be paying more than necessary.

Another option is a variable-rate contract. With this type of contract, your rates will fluctuate along with the market price of energy. This can help you save money if prices go down, but you’ll need to be prepared for higher bills when prices rise.

You should also be aware of green energy options and how they can impact your business. Green energy plans use renewable sources like solar and wind power, which can help reduce your carbon footprint. Many businesses are choosing green energy plans as a way to show their commitment to sustainability.

No matter what type of business energy contract you choose, make sure you understand the terms and conditions before signing anything. This will help ensure that you’re getting the best possible deal for your company.

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How Does Business Energy Differ From Domestic?

The main difference between business energy and domestic energy is that businesses are usually charged a higher rate for their electricity and gas. This is because businesses use more energy than households, and so their consumption is greater. Domestic energy bills are, therefore, usually cheaper than commercial energy contracts.

Businesses also have different needs when it comes to their business electricity and business gas, such as being able to access customer support at all hours of the day or having a flexible contract that can be adapted to their specific needs.

As a result, there are a range of different business energy contracts available, each with its own benefits and drawbacks. It’s important to compare all the options before signing up for any one deal.

Household energy contracts have a cooling-off period, which is around 14 days. This means you get 14 days to change your mind and cancel a contract after you have chosen it. This usually won’t happen for business contracts.

What Happens When Your Business Energy Contract Ends?

When your current contract ends, you will be switched to a default tariff with your current supplier. This is usually the most expensive tariff they offer, so it’s important to switch to a new deal before your contract expires. You can usually switch up to 90 days before your contract ends.

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How Much Energy Should Your Business Be Using?

The amount of gas and electricity your business uses will depend on a variety of factors, including the type of business, the size of the business, the age of the building, and the location. However, there are some best practices that can help you determine how much energy your business should be using.

First, consider what type of business you have. If you have a manufacturing business, you will likely use more energy than a retail business.

Second, consider the age of your building. Older buildings are often less energy efficient than newer ones.

Third, consider your location. Businesses in colder climates will typically use more energy to heat their buildings than businesses in warmer climates.

Once you’ve considered these factors, you can start to estimate how much energy your business should be using. A good rule of thumb is to aim for an Energy Use Index (EUI) of 50 or less.

This means that for every square foot of space in your building, you should be using no more than 50 kWh of energy per year. To put this into perspective, the average commercial office building has an EUI of around 75-100 kWh/sqft/year.

To help improve your EUI, consider implementing some energy efficiency measures, such as installing LED lighting or upgrading to more efficient HVAC equipment. You can also work with your local utility company to find other ways to save energy and lower your costs.

Check the data from Ofgem, where they will show you the wholesale energy costs and how much they have increased. This is the reason for rising power prices. This is why businesses need to look more into renewable energy sources and ways of saving on their energy bills or their energy usage.

Final Thoughts

The different types of business energy options offer a range of advantages and disadvantages to businesses. It is important for businesses to consider their needs and compare the various options available before making a decision about which type of contract would be best for them.

An experienced energy advisor can help businesses understand how these contracts work, what fees are associated with them, and any potential risks or rewards that might come with each one.

Ultimately, by doing the research and exploring all the business energy options, such as different business energy suppliers, businesses will be able to choose the contract that offers them the better deal in terms of price stability, flexibility, and cost savings.

This will save them on their energy bills. Compare business energy suppliers and save up to 45% when you look at business electricity comparison.

Frequently Asked Questions

How do business energy contracts work?

These contracts work by providing a set price for the amount of energy that a business will use over a set period of time. This allows businesses to budget for their energy bills and avoid any price spikes that may occur during the contract period. The length of these contracts can vary, but they typically last between one and five years.

What type of business is an energy company?

An energy company is a company that provides energy services to customers. Energy companies may be utilities, oil and gas companies, or other types of businesses. Utilities are companies that provide electricity, natural gas, or other forms of energy to customers. Oil and gas companies explore for, develop, and produce oil and natural gas.

What is an energy supply contract?

An energy supply contract is an agreement between a customer and an energy supplier. The customer agrees to purchase a certain amount of energy from the supplier over a period of time, usually at a fixed price.

The customer may be an individual, a business, or a government entity. The supplier may be an electric utility, a power generation company, or a renewable energy developer.

What is a non-micro business?

A non-micro business is one that uses more than a certain amount of gas and electricity. If a business uses less than a certain amount of gas and electricity, then they are a micro business. Non-micro businesses are those that have more than 10 employees.

Non-micro business is one that is not considered to be a small or micro business. These businesses are usually larger in scale and scope, and they typically have more employees and resources than smaller businesses.

Can I switch gas and electricity providers?

Yes, changing your gas and electricity provider is super easy. You can choose to switch just one, or both gas and electricity.