Business energy for shops and retail
Business energy for shops and retail
Shops spend most of their energy on lighting, heating and, for food retailers, refrigeration. Across the retail sector, electricity makes up 79 per cent of energy use, so your electricity contract is usually the one that matters most. Look for a deal that matches your trading hours, and check whether a flat above the shop shares your supply.
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How much energy do shops and retail use?
| Benchmark | Value | Source |
|---|---|---|
| Typical electricity use per m², general street retail and services (CIBSE TM46) | 165 kWh/m²/year | GOV.UK |
| Typical electricity use per m², small food store (CIBSE TM46) | 310 kWh/m²/year | GOV.UK |
| Typical electricity use per m², retail warehouse or large non-food store (CIBSE TM46) | 70 kWh/m²/year | GOV.UK |
| Typical heating fuel use per m², retail warehouse or large non-food store (CIBSE TM46) | 170 kWh/m²/year | GOV.UK |
Benchmarks describe typical buildings. Your own use depends on floor area, opening hours, equipment and how efficient your building is.
What do shops and retail pay per kWh?
There are no official prices by business type, but the government publishes what businesses pay by size of energy use. In Q2 2026, the smallest UK business electricity users (up to 20,000 kWh a year) paid an average of 38.36p per kWh, and those using 20,000 to 499,999 kWh paid 28.59p. The smallest gas users paid 9.31p per kWh. These government averages include standing charges and the Climate Change Levy, but not VAT. Your bill shows a unit rate plus a daily standing charge, so it won't match these all-in figures directly. See business electricity prices and business gas prices for every size band.
Choosing an energy contract for shops and retail
- Shops with a flat above often have a domestic supply nearby or a shared one. Check which meter serves what before you switch, and tell the supplier about any domestic use on a business supply.
- Late-opening and 24-hour convenience stores run fridges and lighting overnight, so it is worth checking whether a day/night tariff beats a single rate on your actual usage.
- BEES found most retail energy is used in rented premises. Check your lease to confirm whether you or your landlord is responsible for the energy contract before you agree anything.
- If you run several branches, lining up the renewal dates makes it easier to compare and renew them together.
- Small shops are often microbusinesses (for example fewer than 10 employees and turnover or balance sheet of no more than £2 million). Ofgem rules mean a microbusiness cannot be rolled onto a new contract for more than 12 months.
Compare prices for your business
VAT and Climate Change Levy for shops and retail
If you live in a flat above the shop and it shares the business supply, HMRC treats it as mixed use: if 60% or more is domestic, the whole supply gets reduced-rate VAT and is excluded from the main rates of Climate Change Levy; below that, only the domestic share is. Charity shops are treated differently: HMRC gives selling donated goods as an example of a business activity, so a charity shop's energy is normally charged at 20% VAT.
VAT on business energy · Climate Change Levy explained
How shops and retail use energy
Retail is electricity-led: BEES found electricity was 79 per cent of the sector's energy use, and CIBSE TM46 sets no heating fuel benchmark at all for general street retail or small food stores.
Shop floor and display lighting runs for the whole trading day and often beyond. The Building Energy Efficiency Survey found lighting was an especially large contributor in retail because of high light levels and long hours. Carbon Trust
Chilled and frozen display cabinets and cold rooms run 24 hours a day, and they give off heat into the shop too. Carbon Trust
Open doors, big windows and high ceilings make shops easy to overheat or underheat. Staff dressed for a warm shop floor can also push thermostats up. Carbon Trust
The Carbon Trust notes that some store types find air conditioning costs more significant than others, particularly where lighting and glazing add heat. Carbon Trust
Tills, card terminals, screens and illuminated signs are small loads individually but are often on for long hours.
Trading hours, how much display lighting you use and whether you sell chilled or frozen food make the biggest difference. A small food shop typically uses far more electricity per square metre than a general high street shop because its refrigeration never stops: the TM46 benchmarks are 310 and 165 kWh/m² a year respectively.
Ways shops and retail can cut energy use
Night blinds keep cold air in the cabinets overnight, protect stock and reduce the heating needed when the shop opens. They are cheaper to specify with new cabinets than to retrofit. Carbon Trust
Overfilled shelves can force lower set temperatures. The Carbon Trust says consumption falls by 2 to 4% for each 1°C you can safely raise the set temperature. Carbon Trust
The Carbon Trust says reducing heating temperatures by 1°C can cut fuel consumption by 8%. Practical staff uniforms make a slightly cooler shop comfortable. Carbon Trust
It is often possible to turn heating or air conditioning down or off an hour before closing without staff or customers noticing. Carbon Trust
Without maintenance, light levels can fall by at least 30% in 2 to 3 years. Clean fittings, replace failing lamps and set timers to match trading hours. Carbon Trust
Cabinets holding drinks and other non-perishables can go on a seven-day time switch to turn off overnight and at weekends. The Carbon Trust says it is not cheaper to keep them on. Carbon Trust
FAQs
How much electricity does a shop use?
CIBSE TM46 puts typical electricity use at 165 kWh per square metre a year for general street retail, 310 kWh for a small food store and 70 kWh for a retail warehouse. Divide your annual kWh by your floor area to see how you compare.
Why is my food shop's electricity bill so high?
Refrigeration is usually the reason. The Carbon Trust says refrigeration can account for half the total electricity bill in a small retail outlet, so cabinet maintenance, night blinds and correct temperatures make a real difference.
Is it cheaper to leave drinks chillers on overnight?
No, not for chillers holding drinks and other non-perishables. The Carbon Trust says it is not cheaper to keep them switched on; a seven-day timer can turn them off out of hours. Keep chilled food cabinets running as food safety requires.
Do charity shops get reduced-rate VAT on energy?
Normally not. HMRC's fuel and power manual gives selling donated goods as an example of a business activity, and the charity reduced rate only applies to non-business use.
Is my shop a microbusiness?
You are a microbusiness if you use less than 100,000 kWh of electricity or 293,000 kWh of gas a year, or have fewer than 10 employees and turnover or balance sheet of no more than £2 million. Microbusinesses get extra protections, including a 12-month limit on rollover contracts.
Sources
- Carbon Trust, Retail energy efficiency guide (CTV053v2, 2018)
- Carbon Trust, Hospitality sector guide (CTV058 v3, 2018), lighting share by sector table
- CIBSE TM46:2008 Energy Benchmarks, Table 1 (reproduced by Vale of Glamorgan Council)
- BEIS (now DESNZ), Building Energy Efficiency Survey 2014-15: Overarching Report
- HMRC, Fuel and power (VAT Notice 701/19)
- HMRC, VAT Fuel and Power Manual VFUP2400 (charity non-business use)
- HMRC, Climate Change Levy reliefs and special treatments (Excise Notice CCL1/3)
- Ofgem, Set up a business energy contract
- Gas and Electricity Regulated Providers (Redress Scheme) (Amendment) Order 2024 (microbusiness criteria)
Other business types
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