How to set up business energy for a new business

Energy is one of the first bills a new business runs up, often before the doors open. Fitting out, testing equipment and running heaters all use power, and if you have not agreed a contract you pay for it at the supplier’s default prices.

This guide covers what to do before and after you get the keys, what suppliers will ask a business with no history, and how to estimate what you will use.

Do you need a business energy contract?

Yes, if you trade from business premises. Ofgem says “businesses need a business energy contract for the energy they use.”

If you run the business from home, you usually do not. Ofgem says most people who work from home will be on a domestic contract and do not need a separate business contract.

You will usually need a contract for each fuel. Ofgem says you will usually have one for each type of energy you use, and if your gas and electricity come from different suppliers you get a separate bill for each.

How do you set up energy for a new business?

Arrange a contract before you move in if you can. Citizens Advice recommends this so you know your prices and any connection costs from day one.

1. Find out who supplies the premises. Ask the landlord, agent or previous occupier for a recent bill. It shows the supplier and the meter numbers. Our change of tenancy guide explains how to look it up if there is no bill.
2. Get the meter numbers. You need the electricity MPAN and gas MPRN to get accurate quotes.
3. Get quotes. From the current supplier and others. You are not tied to the supplier already at the property.
4. Take dated meter readings on your first day. Citizens Advice recommends photos with the date, even if there is a smart meter.
5. Tell the current supplier you have moved in. Send your readings and proof, such as a letter from your landlord, confirmation from your solicitor or estate agent, a business rates statement or a mortgage completion letter.
6. Agree a contract and set up how you will pay.

What happens if you use energy before agreeing a contract?

You are placed on the current supplier’s deemed contract. Ofgem says this happens “when you move into a new business premises and use electricity or gas before agreeing a contract with a supplier”. Citizens Advice warns a deemed contract often costs more.

The upside is flexibility. Under the supply licence, a deemed contract must not have a fixed term, a termination fee or a notice requirement, so you can agree a proper contract with any supplier whenever you are ready. Our deemed contracts guide explains how deemed rates work.

What if the premises have no supply?

If there is no working meter or connection, you need a new connection rather than a new contract. That involves the local network operator and can take time, so start early. See our guide to a new business energy connection.

If your landlord holds the energy contract and recharges you, you are not the supplier’s customer. Your lease sets how you are billed. Our change of tenancy guide covers this.

What will a supplier ask a new business for?

EDF, for example, asks for:

• your business address and contact details
• your expected energy use, in kWh or pounds
• your business type: limited company, sole trader, charity or partnership
• your company registration number, if you have one
• your meter type

Expect a credit check. British Gas says it credit checks both you and your business. Octopus Energy’s business terms say it may check all partners in a partnership or all directors of a limited company. For a brand-new company with no accounts, that personal history can carry more weight.

Can a new business pass a credit check?

Usually, but a supplier may want extra security first. Crown Gas & Power, for example, says it uses credit reference agency data and its own assessment of your credit score, management accounts and payment history. The outcome can be to accept, reject, or accept with conditions.

Typical conditions include:

• a security deposit
• a guarantee or bond
• a payment in advance on your account
• a different payment method or contract length

The 2022 joint advice from Ofgem, Citizens Advice, Advice Direct Scotland and Energy UK said Ofgem expects deposits to be a reasonable amount, with up to three months of future use typically adequate and no more than six. Our guide to credit checks and security deposits covers amounts, refunds and what to do if you are turned down.

How do you estimate your energy use with no bills?

Suppliers need an annual usage figure to price your contract. If you guess too high or too low, your quote and any deposit can be off. Three ways to get a figure:

• Ask for the previous occupier’s usage. The landlord or agent may have past bills for the unit.
• Use a benchmark. Our average business energy bill guide and sector pages, such as restaurants and cafes and shops, give typical figures.
• Add up your equipment. Multiply each item’s power in kW by the hours it will run.

Worked example (illustrative figures): a small shop plans its electricity use.

Item	Power	Hours of use	kWh a year
Chiller cabinet	0.2 kW average	24 hours a day, 365 days	1,752
Lighting	1 kW	10 hours a day, 300 days	3,000
Heater	2 kW	4 hours a day, 120 days	960
Total			5,712

That is about 476 kWh a month, or 15.6 kWh a day on average. Our business energy cost calculator and equipment running cost calculator can do this for your own equipment.

Once you have a year of real bills, you have an accurate figure for your next quote.

Are you a microbusiness?

Many new businesses are. For energy, you are a microbusiness if you use no more than 100,000 kWh of electricity or 293,000 kWh of gas a year, or have fewer than 10 employees (or full-time equivalent) and an annual turnover or balance sheet of no more than £2 million. You only need to meet one test.

The shop in the example above uses far less than 100,000 kWh, so it is a microbusiness for electricity whatever its size.

Suppliers must take all reasonable steps to find out whether you are a microbusiness, or treat you as one. As a microbusiness you get:

• the principal terms explained in plain language before you agree
• your contract terms in writing within 10 days, or as soon as reasonably practicable after
• your end date on every bill and a renewal letter before it
• no notice needed to leave at the end of a fixed term
• a 12-month limit on rollovers

Micro and small businesses can also take unresolved complaints to the Energy Ombudsman. See our microbusiness energy guide.

Which contract suits a new business?

We cannot tell you which contract to pick, but these points are worth weighing:

• Price certainty. A fixed contract sets your unit price for the term, which makes early budgets easier. See types of business energy contract.
• How sure you are about usage. If your estimate is rough, a shorter term gives you the chance to re-quote once you have real bills.
• Your lease. Moving out does not end a fixed contract by itself. EDF’s terms, for example, let you give notice when you stop renting the premises, but you may be charged an early termination fee if the fixed term has not ended.
• No cooling-off period. Ofgem says there is no cooling-off period after you agree a business contract, even over the phone. Read the terms first.
• No price cap. Business energy is not covered by Ofgem’s price cap, so the price you agree is the price you pay. See our business energy price cap guide.

What taxes will a new business pay on energy?

Most business energy carries VAT at 20% and the Climate Change Levy. The main CCL rate is 0.801p per kWh for electricity and gas from 1 April 2026. See our Climate Change Levy guide.

Low-use sites pay less VAT. HMRC treats supplies as de minimis if a site uses no more than 33 kWh of electricity a day or 1,000 kWh a month on average, or 145 kWh of gas a day or 4,397 kWh a month. These get the reduced rate of 5%. From 1 October 2026 to 31 March 2027, qualifying electricity in Great Britain is zero-rated instead. The example shop above, at about 476 kWh a month, would qualify. Our VAT on business energy guide explains the rules, and our VAT and CCL relief checker helps you check your own site.

New business energy checklist

Before you move in	On your first day	In your first weeks
Ask for a recent bill and meter numbers	Take dated photos of every meter	Agree a contract to get off deemed rates
Check whether there is a working supply	Tell the supplier you have moved in	Check your first bill starts from your readings
Estimate your annual usage	Send proof of your tenancy	Check the VAT rate on your bill
Get quotes and check the credit terms		Diary your contract end date

When you are ready, you can compare business energy quotes for your new premises.

Frequently asked questions