How to reduce business energy costs

If you run a small business, energy could well be one of your biggest overheads. But unlike rent or payroll, it is one area where targeted action can deliver real savings.

This guide goes beyond the basics. You will find practical, advanced strategies to cut your business energy bills, from contract optimisation and smart technology to staff habits and energy audits.

In this guide to reducing business energy costs…

1. The key differences between quick, low-effort changes that reduce energy use straight away and longer-term investments that can deliver sustained savings over time.
2. The day-to-day operational changes you can make right away to cut electricity and gas consumption without disrupting how your business runs.
3. The types of energy-efficient technology and equipment that can lower your ongoing energy demand and reduce costs in the long run.
4. How everyday staff habits can impact your energy bills, and simple ways to encourage better behaviour that helps reduce unnecessary usage.
5. Whether investing in a professional energy audit makes sense for your business, and how it could help you uncover hidden inefficiencies and cost-saving opportunities.

Are business energy costs rising?

UK business energy prices have been pretty volatile since 2021. Wholesale market volatility, supply disruption, and grid costs have all pushed unit rates higher. 

According to Ofgem, non-domestic energy customers saw average electricity unit rates more than double between 2020 and 2023. Gas costs followed a similar pattern. Even though prices have stabilised recently, they're still well above pre-2021 levels.

For small businesses, the impact is direct. Higher bills eat into your margins. And unlike large and industrial businesses, most SMEs lack dedicated procurement teams to manage energy spend.

If you feel like you're being clobbered by high energy bills, there may be more room to cut costs than you think. Consistent savings can be made through a combination of operational changes, better contracts, and some investment in technology.

Consider quick wins and long-term savings

Before diving into specific strategies, it helps to think in two time frames: quick wins and long-term savings.

Quick wins (low or no cost, immediate effect)

• Switch off equipment fully outside trading hours
• Replace fluorescent lighting with LED
• Fix draughts and seal gaps to reduce heating load
• Set heating and cooling to trigger only during occupied hours
• Audit standby power use across all devices

Long-term strategies (investment required, sustained return)

• Install a smart meter for real-time usage monitoring
• Switch to a better-fit energy tariff or supplier
• Invest in building insulation or double glazing
• Upgrade to more efficient equipment when the existing kit needs replacing
• Implement automated energy management systems

Neither approach alone gives you the full picture. The businesses that cut costs most effectively combine both.

How to make operational efficiency improvements

The fastest ways to reduce business energy consumption involve changing how you use energy day to day. And the best thing here is that little or no extra money is needed to make savings. Consider the following:

Lighting

Lighting can account for up to 40% of electricity use in commercial premises. Switching from halogen or fluorescent to LED can cut that share by up to 75%. LED bulbs also last significantly longer, reducing replacement costs.

To make the most of your lighting, audit every fitting and replace on a rolling basis, starting with the highest-use areas.

Heating, ventilation, and air conditioning (HVAC)

HVAC can account for up to 50% of total building energy consumption, but small changes can have a big impact.

• Setting thermostats just 1°C lower in winter can reduce heating bills by around 8%
• Check that heating and cooling systems are not running at the same time
• Service boilers and air conditioning units annually to maintain efficiency
• Consider zone controls so you only heat or cool areas in active use

Government advice states that the temperature in all indoor workplaces must be reasonable. But guidance suggests that temperatures should never drop below 16ºC or 13ºC if employees are doing physical work. 

Although there's no guidance for a maximum temperature limit, you always need to consider the welfare of your employees.

Equipment and standby power

If you run a business with up to 15 employees, leaving equipment on standby could see you needlessly spending an extra £900 a year on electricity. If you have 100 or more employees, the figure rises to almost £7,000.

This extra energy use is largely invisible and easy to miss, so consider the following:

• Install smart power strips or timer plugs to cut overnight standby draw
• Set computers and monitors to sleep after 10 minutes of inactivity
• Turn off vending machines and water coolers outside business hours, where practical

Energy-intensive industries

If your business operates in energy-intensive sectors such as manufacturing, food processing, or horticulture, you may qualify for relief under the Energy Intensive Industries (EII) scheme or exemptions from the Climate Change Levy (CCL). 

Find out more at our guide to the Climate Change Levy, then speak to your energy supplier or broker to check eligibility.

Contract optimisation (also known as switching)

For most small businesses, switching suppliers or renegotiating a contract can have the biggest impact on energy costs. Yet many businesses stay on out-of-contract or deemed rates, which are significantly more expensive than negotiated fixed tariffs.

When you get a quote with MoneySuperMarket, we compare tariffs from trusted UK energy suppliers. This makes it easy to see whether you could get a better deal than your current one.

Fixed vs variable tariffs

A fixed-rate tariff locks in your unit rate for the contract term, typically 12 to 36 months. A variable tariff moves with the market.

• Fixed tariffs: predictable costs, good for budgeting
• Variable tariffs: can fall when wholesale prices drop, but add risk

For most small businesses, a fixed tariff offers more financial control. The key is to enter the contract at the right time and renegotiate before the automatic rollover period.

For more detailed info, check out our guide to fixed vs variable-rate tariffs for businesses.

When to switch

Most business energy contracts include a switching window, typically three to six months before renewal. Missing this window can lock you into another term, often at a higher rate.

Make a note of your renewal window and start comparing business energy prices at least four months before your contract ends.

You can find out more in our guide on when to switch business energy.

Could a half-hourly meter reduce your costs?

If your business draws more than 100kWh in any 30 minutes, you are legally required to have a half-hourly (HH) meter installed. These meters record usage in 30-minute intervals and transmit data directly to your supplier.

Half-hourly metering gives suppliers and brokers much more granular data to work with. This often results in more competitive bespoke tariffs, because suppliers can see exactly when you use energy and price accordingly.

Businesses already on HH metering should make sure they are using the data. If you are not reviewing your half-hourly profile with your supplier or broker, you may be missing out on tariff optimisation.

Authorised supply capacity

Large and industrial energy users are charged partly based on their authorised supply capacity (ASC) — the maximum level of electricity your site is permitted to draw. If your ASC is set higher than you actually need, you are paying for capacity you do not use.

Review your ASC with your Distribution Network Operator (DNO). If your actual peak demand is consistently below your contracted level. You may be able to reduce it and cut a portion of your fixed charges in the process.

Technology investments that reduce energy demand

Some of the most effective long-term savings come from investing in the right technology. Upfront costs are often modest, and payback periods have shortened as equipment prices have fallen.

Smart meters

A smart meter records your energy use in near real time and sends readings automatically to your supplier. This removes estimated bills and gives you accurate data on when and how you use energy.

Smart meters are typically installed free of charge, with any associated costs spread across standing charges over time. For most businesses, the billing accuracy and visibility they provide outweigh any cost.

Research from the Department for Energy Security and Net Zero suggests that businesses using smart meter data actively could reduce electricity use by around 3–4% and gas use by around 3%. For a business spending £10,000 per year on energy, that could be £300 to 400 in annual savings.

The real gains come when you act on the data: identifying peak-use windows, shifting load to cheaper periods, and catching equipment faults early.

Automated energy management systems

An energy management system (EMS) gives you centralised control over heating, cooling, lighting, and other systems. Most modern EMS platforms include scheduling, remote access, and usage alerts.

Entry-level systems start from a few hundred pounds. More sophisticated platforms with AI-driven optimisation are available for larger sites. Either way, the principle is the same - use data to stop wasting energy automatically.

Voltage optimisation

UK mains voltage is typically around 242V, while most electrical equipment is designed to run efficiently at 220V. Voltage optimisation equipment reduces incoming supply to the optimal level, which can cut electricity use by 8–15% depending on the equipment mix.

This is particularly effective for businesses with high-draw machinery, refrigeration, or air conditioning.

Behavioural changes in teams

Technology and contracts matter. But staff habits have a measurable effect on energy consumption and changing them costs very little.

Build awareness

Most employees do not think about energy costs. A simple display showing daily or weekly energy use can shift behaviour without formal training.

• Put energy monitors in visible locations
• Share monthly usage summaries with your team
• Celebrate measurable reductions

Set clear policies

Ambiguity leads to inconsistency. Write down what you expect and make it easy to follow.

• Turn lights off in unoccupied rooms
• Switch off computers at the end of the day instead of sleep mode
• The last person out checks the heating
• Report faults like dripping taps, faulty seals on refrigeration, broken window seals

Assign responsibility

Designate an energy champion who is responsible for monitoring usage and flagging concerns. In a small team, this role rotates. In a larger one, it sits with a facilities or office manager.

Are energy audits worth it for small businesses?

An energy audit is a structured assessment of how your business uses energy and where it is being wasted. A qualified auditor reviews your building, equipment, processes, and billing data, then produces a prioritised list of recommendations.

What an audit typically covers

• Building fabric: insulation, glazing, draughts
• Heating, cooling, and ventilation systems
• Lighting: type, controls, placement
• Equipment: age, efficiency ratings, standby behaviour
• Tariff and billing review

For most small businesses, a basic audit costs between £300 and £1,500. Government-backed schemes, including support through the Energy Saving Trust and the British Standards Institution's BS EN 16247 framework, may reduce or remove this cost for eligible businesses.

The payback period for audit recommendations is typically one to three years. For a business spending £15,000 or more per year on energy, a professional audit is almost always worthwhile.

Should you switch suppliers, or focus on efficiency?

The answer is do both, but start with the contract.

Switching to a better tariff or supplier is usually the fastest way to reduce your bill. Efficiency measures compound the savings by reducing the number of units you pay for at the new, lower rate.

MoneySuperMarket compares quotes from trusted energy suppliers. You can see your options in minutes, without committing to anything.

• Switch supplier or renegotiate your contract first
• Then invest in efficiency to reduce consumption
• Use smart meter data to track the combined impact

Business energy FAQs

If you still have questions about cutting business energy costs, here are answers to the most common ones.

What is the fastest way to reduce business energy costs?

Switching suppliers or renegotiating your contract is usually the fastest high-impact action. If your contract has expired or you are on a deemed rate, you could cut costs by 15–30% by moving to a fixed tariff from a competitive supplier. Alongside this, turning off equipment fully outside trading hours can deliver immediate reductions at no cost.

How much can SMEs realistically save on energy?

It depends on your starting point. Businesses on old or out-of-contract rates can save 20–40% by switching and improving efficiency. If you are already on a competitive fixed tariff, operational changes and technology investment are more likely to yield 5 to 15%. The key is to act on data rather than making one-off changes.

Do energy-saving measures require upfront investment?

Many do not. Turning off standby equipment, adjusting thermostat settings, and switching to LED lighting all cost little or nothing. Larger investments — such as voltage optimisation or building insulation — require upfront spend but typically pay back within two to four years. Government-backed schemes and energy efficiency loans may reduce the net cost further.

Can staff behaviour significantly affect energy bills?

Yes. Research from the Carbon Trust indicates that behavioural change in commercial settings can reduce energy use by 5–15%. The biggest factors are overnight standby use, heating habits, and lighting in unoccupied spaces. A simple written policy and a designated energy champion are often enough to drive meaningful change.

Are energy audits worth it for small businesses?

For most businesses spending over £10,000 per year on energy, a professional audit pays for itself within a year or two. Audits identify inefficiencies that are not obvious from bills alone — such as oversized HVAC systems, poorly calibrated controls, or tariff mismatches. Government-supported audits may be available at reduced cost through schemes such as the Energy Saving Trust.

What technologies reduce energy costs most effectively?

Smart meters, automated energy management systems, LED lighting, and voltage optimisation equipment all have strong track records in commercial settings. Smart meters are the starting point — they give you the data to make every other decision more effective. For businesses with significant HVAC demand, zone controls and building management systems often deliver the largest absolute savings.

Can switching suppliers reduce costs more than efficiency measures?

Often, yes — especially if you are on an expired or uncompetitive contract. Switching can reduce your unit rate immediately, delivering savings on every unit you use. Efficiency measures reduce the number of units, but at whatever rate you are already paying. The combination of both gives you the best outcome. Start with your contract, then focus on consumption.

How often should businesses review energy usage?

At a minimum, review your usage at the end of each billing period. With a smart meter, daily or weekly monitoring is straightforward. Review your tariff and compare alternative options at least four months before your contract renewal date. An annual energy audit or self-assessment helps you track progress and identify new savings opportunities.

Compare business energy deals

Reducing your energy costs starts with making sure you are on the right deal.

When you get a quote with MoneySuperMarket, we compare business energy tariffs from trusted suppliers. You can see your options in minutes and choose the contract that fits how your business uses energy.