Business owners rely on high quality energy supplies to keep their premises running during the working hours – any disruption to this could cause a meltdown for the business, who are temporarily cut off from their operations. Commercial electricity is essential in almost every business and sector, and is responsible not only for lighting rooms, but for powering computers, machines, technical equipment and more (don’t forget the coffee machine!). Businesses must be certain that the supplier they choose will provide them with the stable electricity that they need, otherwise they will face undesired challenges.
In residential homes, the consequences of a poor quality energy supplier are not so damaging as in a business, but can be an awful nuisance. Homeowners pay for the stable supply of energy that will keep their home lit up and connected, and any disruption to this will be sure to cause annoyance.
What are the differences between business electricity and residential electricity?
In terms of the quality, the energy is exactly the same, but the pricing structures are much different. As a business requires far more energy than a home, they must purchase larger amounts of energy, so they are catered for by business electricity suppliers, many of which do not sell energy to residential homes. But is business electricity cheaper than residential? Technically, it could be argued yes, as by buying electricity in bulk, companies get a better price per unit. The suppliers more than make up for selling at a reduced price, as they are able to provide a lot of energy over time and recuperate the discount.
Is business electricity cheaper than residential 100% of the time?
No. Residential electricity can be cheaper than business electricity depending on the market situation, taxes and other variable factors. For example, providers of residential energy buy their energy in bulk themselves months in advance and then distribute it to customers. They will wait until the price is optimal and then buy the energy. For business contracts, the energy is purchased at the same time the contract is set up, meaning the business agrees to pay whatever the market dictates. Usually, this price is cheaper, but in the case where the price is very similar, taxes have an important role to play. Residential energy bills are taxed at 5% VAT, whereas business must pay 20%, meaning it’s plausible that a business pays more per unit in the long run.
Contracts play an important role
When asking ‘Is business electricity cheaper than residential?’, it’s important to look at all of the available facts. For example, homeowners who pay electricity bills are not obligated to stay with their provider for the duration of the contract and can change at almost any time to a new service, generally to get a better price. For businesses, they sign up for a contract that could be anywhere from one year to five years in length, and are given a fixed price during this time, with the longer the contract, the better the price. However, if during that contract the market prices of energy drop considerably, businesses will still be tied in to the fixed rates and will not benefit, giving residential energy the opportunity to become cheaper.
Can you get business electricity at home?
If you work from home or run your business out of your home and these activities consume more than 50% of your energy, then you are able to purchase business energy at home. This should allow you to get better energy rates on a long term contract, but you will have to jump through many hoops to do this.
There’s no single defining answer for the question ‘Is business electricity cheaper than residential?’, but we believe it’s safe to say that in general, business electricity is cheaper than residential, and only certain uncommon circumstances will alter that.