Information for businesses

How the non-domestic market works

• Under the GB energy regulatory system, suppliers are under no duty to offer a business an energy contract. The rules are different for households, where there is an obligation to supply.
• Like any prudent business operates, energy suppliers have to consider their own exposure when choosing whether to offer a contract to a business, and a potential customer’s risk profile is taken into account when designing products to offer.
• Energy suppliers have to buy the energy they sell to customers on the wholesale market. As non-domestic contracts can cover bigger volumes and be longer in length than domestic contracts, this can result in large amounts of capital outlay.
• Each business has its own risk profile – for example a pub and an office might use the same amount of energy but represent an entirely different risk to a supplier.
• With the current volatility and credit risk in the market, some suppliers are in response, looking more closely at their credit checking of consumers before offering a non-domestic contract.
• Where a supplier does choose to offer a product, as part of their credit risk management, they may consider applying certain terms to offset potential risk, which can include requesting that customers pay a security deposit as part of their onboarding process.
• Businesses may be refused an energy contract for various commercial reasons including a credit risk profile which is out of the range the supplier will accept for their own hedging in the energy market.
• Each supplier will view risk differently and some may offer products tailored to different risk or consumption profiles or sectors.

Ways businesses can reduce bills

Energy Efficiency

• The economic case for investing in energy efficiency is clear. With prices so high, payback periods are much shorter and there may be additional grants or funding available.
• For businesses looking to improve their energy efficiency:
  • The Energy Savings Trust provides energy efficiency advice for businesses
  • The Drax website contains useful guides with specific advice for the hospitality, leisure, agriculture, offices, public sector and manufacturing sectors
  • The Energy Technology List (ETL) is a government list of energy efficient plant and machinery. In order for a product to be listed, it must meet the ETL’s robust energy saving criteria – typically set at the top 25% of products in the market. Industrial energy transformation fund is designed to help businesses with high energy use to cut their energy bills and carbon emissions through investing in energy efficiency and low carbon technologies £315mn funding until 2027
  • Check with your local council or see if there are grants that may be able to support the upfront cost
  • Zero Carbon Business is a hub of useful advice for businesses and links

The Government has launched a campaign outlining advice that can improve the energy efficiency of your business, helping you save money, protecting against potential future energy price increases and enhancing productivity. You can find more information at the below link.

Onsite generation

• Investing in onsite generation also reduces bills, and can provide extra income for businesses.
  • The Smart Export Guarantee Scheme pays businesses for electricity produced and exported to the grid. It is available to small scale low carbon generators (onshore wind and solar up to 5MW, Micro CHP up to 50kW and Anaerobic Digestion)
  • The YouGen website can help find installers for renewable energy generation

Upgrading heating

• Gas heating can be expensive and businesses may be able to save by switching to other forms of heating.
• Through the Boiler Upgrade Scheme, £450 million of grant funding is available over three years from 2022 to 2025. Acting on behalf of property owners, installers can apply for:
  • £5000 off the cost and installation of an air source heat pump
  • £5000 off the cost and installation of a biomass boiler
  • £6000 off the cost and installation of a ground source heat pump, including water source heat pumps

Seeking further help

• Businesses should contact their supplier if they are struggling to pay to make them aware of their situation. Suppliers can advise on where extra support may be available, and may be able to offer payment plans but this is agreed on a case by case basis
• The Business Debtline is a free, confidential debt advice service for the self-employed and small businesses. You can access Business Debtline by phone, webchat, or get advice through the website
• Businesses may also be able to cut costs by switching supplier where they can.
• Businesses should try to read their meters at least once every year and give the readings to their supplier so that they are only billed for the energy used rather than getting estimated bills.
• Smart meters or Automated Meter Reading (AMR) devices are available to some customers and automatically send meter readings to the energy supplier.

Support where there is no resolution with the supplier

• Business customers who are unable to secure a business energy contract are encouraged to shop around different suppliers for terms they find suitable.
• Complaints against suppliers may be taken to the Energy Ombudsman or Citizens Advice in the case of microbusinesses and Ofgem for larger businesses.