How to cut business heating costs

For most offices, shops, workshops and warehouses, heating is the biggest single slice of the energy bill. The good news is that a lot of heating waste comes from settings and habits rather than equipment, so some of the largest savings cost nothing. This guide explains what drives your heating costs, compares gas and electric heating, and works through the fixes in the order most businesses should tackle them.

How much of a business energy bill is heating?

Heating is usually the largest single use of energy in business premises. The government’s Building Energy Efficiency Survey found that space heating used 66,940 GWh of the 161,060 GWh consumed by non-domestic buildings in England and Wales in 2014-15, about 42% of the total.

The Carbon Trust puts it in similar terms:

• Heating typically accounts for up to 40% of the energy used in non-domestic buildings.
• In offices, heating is typically about a third of the energy used.
• Most of that space heating comes from gas boilers.

The share in your building depends on what else you run. A bakery, a cold store or a data-heavy office will have big electrical loads on top. But if you have a gas supply and a boiler, the gas bill is mostly your heating bill.

How much does it cost to heat business premises?

Your heating cost is the energy your building needs, multiplied by the price you pay for each kWh of fuel. The fuel price is where the gap between gas and electricity shows up.

The Department for Energy Security and Net Zero (DESNZ) publishes average prices paid by non-domestic customers. For January to March 2026 (provisional figures), including the Climate Change Levy but not VAT:

Business size (annual use)	Gas (p per kWh)	Electricity (p per kWh)
Very small	7.48	35.02
Small	4.77	28.76
Average across all sizes	5.17	24.14

For gas, very small means under 278 MWh a year. For electricity, very small is 0 to 20 MWh and small is 20 to 499 MWh. These are fully delivered prices, so standing charges are spread across the units. Your own contract rate may be higher or lower. For today’s market figures, see our business gas prices and business electricity prices pages.

Is gas or electric heating cheaper for a business?

Per kWh of heat delivered, a gas boiler is usually cheaper to run than direct electric heating, because gas costs several times less per kWh. A heat pump changes the maths, because it produces more heat than the electricity it uses.

Worked example: heating a small office

This is an illustration, not a quote. It uses rounded example inputs so you can swap in your own.

Input	Value	Where it comes from
Heat the building needs in a year	20,000 kWh	Example
Gas price	4.77p per kWh	DESNZ small business average, Q1 2026
Electricity price	28.76p per kWh	DESNZ small business average, Q1 2026
Gas boiler efficiency	90%	Example assumption
Heat pump efficiency	3 kWh of heat per kWh of electricity	Example assumption
Direct electric heater efficiency	100% at the point of use	Example assumption

Heating type	Fuel needed	Example annual cost
Gas boiler	22,222 kWh of gas	about £1,060
Heat pump	6,667 kWh of electricity	about £1,917
Direct electric heaters	20,000 kWh of electricity	about £5,752

On these inputs, gas is cheapest to run, a heat pump sits in between, and plug-in or panel heaters cost the most. The result is very sensitive to the price gap between your gas and electricity rates and to how efficient the heat pump really is in your building. Our heat pumps for business guide explains what affects that.

The example also leaves out the costs of buying, installing and maintaining each system. If you use portable electric heaters, our equipment running cost calculator shows what each one costs per hour at your own rate.

What temperature should a business keep its premises at?

The Carbon Trust says thermostats should generally be set at 19 to 20°C for heating, adjusted for the activity taking place. The Health and Safety Executive (HSE) says a reasonable working temperature in workrooms is usually at least 16°C, or 13°C for strenuous work.

Every degree matters. The Carbon Trust says heating costs rise by about 8% for each 1°C of overheating. Overheating often comes from heating storerooms and corridors to the same temperature as occupied areas, or from poor control of the system.

The Carbon Trust’s guide includes customary winter temperatures adapted from the CIBSE design guide. A few examples:

Space	Customary winter temperature
Offices	21 to 23°C
Retail buildings	19 to 24°C
Restaurants and dining rooms	22 to 24°C
Hotels	19 to 21°C
Factories, sedentary work	19 to 21°C
Factories, light work	16 to 19°C
Factories, heavy work	11 to 14°C
Sports halls	15°C

Treat these as design ranges, not targets. If people are comfortable at the lower end, set the thermostat there.

What are the quickest ways to cut heating costs?

Start with how the heating is set and used, because those fixes cost little or nothing. This checklist draws on Carbon Trust guidance:

1. Match the timer to your opening hours. Check the controls show the right time and date, including after the clocks change. Heating should not run overnight or at weekends when nobody is in.
2. Reset overrides. If staff work late and change the controls, reset them afterwards, or fit a timer that restores normal settings automatically.
3. Turn thermostats down, not windows open. If a room is too warm, adjust the thermostat rather than letting heat out.
4. Keep doors and windows closed while the heating is on. The Carbon Trust says you can save up to a third on heating or cooling costs by reducing the outside air that enters a building.
5. Stop heating and cooling fighting each other. Leave a gap of around 4 to 5°C between the heating and cooling set points (for example, heating off above 19°C and cooling off below 24°C) so both never run at once.
6. Heat spaces to what they need. Set storerooms and corridors lower than occupied areas, and use zones so each area has its own time and temperature settings.
7. Use thermostatic radiator valves (TRVs). They give local control of each radiator. Make sure people know how to use them.
8. Put portable heaters on a time switch. The Carbon Trust suggests a simple switch that turns them off after a set time, such as 30 minutes. Frequent use of portable heaters is a sign the main system needs attention.
9. Move desks away from draughts. Keeping workspaces out of draughts and direct sunlight helps people feel comfortable at a lower setting.

How much can better heating controls save?

The Carbon Trust says using optimum start instead of fixed time controls could save you 10% in energy costs. Optimum start controls vary the time the heating comes on depending on the weather outside, so the building reaches temperature just as people arrive rather than hours early.

Other control upgrades worth asking your heating engineer about:

• Weather compensation, which adjusts the boiler’s water temperature to the outdoor temperature.
• Zoning, so different parts of the building run to their own schedules.
• Interlocks that stop heating running while a loading bay door is open.
• Thermostats in the right place, away from draughts, heat sources and direct sun.

The Carbon Trust notes that Building Regulations call for optimum start controls on all boiler plant rated over 50kW. Your boiler’s rating is usually shown on the front or inside the front cover.

Does servicing a boiler reduce heating bills?

Yes. The Carbon Trust says a regularly serviced boiler can save as much as 10% on annual heating costs, and heating costs can rise by 30% or more if a boiler is poorly operated or maintained. It recommends servicing gas boilers once a year and oil boilers twice a year.

Maintenance is wider than the boiler itself. The Carbon Trust says energy use can rise by up to 30% if regular maintenance isn’t carried out. Ask your engineer to check the whole system, including controls, pumps and valves.

Insulating the boiler, hot water tanks, pipes and valves is another quick win. The Carbon Trust says payback can usually be expected within a few months.

How do you stop heat escaping from the building?

Most heat leaves through the roof, walls, floor, windows and gaps, and the Carbon Trust says an industrial building could be losing 75% of its heat through its fabric. Where it goes depends on the building:

Part of the building	Carbon Trust figure
Roof	typically over 20% of heat lost
Walls	around 9% of heat lost
Ground floor	nearly 10% of heat lost

Roofs and lofts

Insulating a loft space can cut heat loss through the roof by over 80%, according to the Carbon Trust. If there is less than 150mm of loose insulation, it says it is always worth adding more, aiming for at least 270mm. If you rent, check with your landlord before any building work.

Draughts and doors

Draught stripping is cheap and easy. The Carbon Trust says it can reduce heating costs by up to 10% and pay back within a year or two. It also points out that a 3mm gap around a door lets in as much cold air as a hole in the wall the size of a brick.

For busy entrances and loading bays, options include:

• automatic closers on external doors
• a draught lobby, large enough that one set of doors closes before the other opens
• sealing doors that are never used
• interlocks that switch heating off when a large door is open

High ceilings

In tall buildings such as warehouses and workshops, warm air rises and collects at the roof. The Carbon Trust says it can be up to 10°C warmer at ceiling level than where people work. Destratification fans push that heat back down, and in most cases the value of the heat saved far exceeds the cost of running the fans. Radiant heaters, which warm people and objects directly, can also use significantly less fuel than convection heating in large, high spaces.

When should you replace a business boiler?

Replace a boiler when it is unreliable, costly to repair or clearly inefficient, and plan the replacement before it fails so you are not forced into a like-for-like swap. The Carbon Trust says modern condensing boilers offer a substantial efficiency improvement over older types, because they recover heat that older boilers lose up the flue.

Whenever you replace heating equipment, the Carbon Trust advises against simply swapping like for like. Choose the most efficient option that is fit for purpose.

That is also the moment to consider a heat pump. In England and Wales, the Boiler Upgrade Scheme gives £7,500 off an air source or ground source heat pump for eligible homes and non-domestic buildings. Until 31 March 2027, eligible properties heated by oil or LPG with no mains gas connection can get £9,000. The scheme does not fund hybrid systems. Our heat pumps guide covers suitability and running costs, and our energy efficiency grants guide lists support in each nation.

Can your energy contract lower heating costs?

Yes. Controls and insulation cut the kWh you use, but your contract sets the price of every kWh. A few things to check:

• Are you out of contract? Deemed and out-of-contract rates are usually much higher. See our guide to out-of-contract rates.
• Fixed or flexible? Heating demand peaks in winter, so price rises hit hardest then. Our fixed vs flexible contracts guide explains the trade-off, and our market data page tracks wholesale gas.
• VAT and Climate Change Levy. Gas used at a low level qualifies for the reduced 5% VAT rate: up to 145 kWh a day on average, or 4,397 kWh a month. The Climate Change Levy on gas is 0.801p per kWh from 1 April 2026. Our VAT on business energy and Climate Change Levy guides explain both.
• Electric heating. If you run storage heaters overnight, a two-rate tariff may suit you. Our time-of-use tariffs guide explains how to check.

What should you do first?

1. Pull 12 months of gas and electricity bills and note your winter use against your summer use. The difference is roughly your heating load.
2. Walk round early in the morning and after closing to see when the heating is actually on.
3. Fix timers, thermostats and overrides.
4. Book a boiler service and ask for a check of controls and pipework insulation.
5. Seal draughts and fit door closers.
6. Look at insulation, destratification and a heating upgrade once the easy wins are done.
7. Check your contract end date and rates.

A structured business energy audit can do much of this for you, and our guide to reducing business energy costs covers lighting, equipment and everything else. Once your usage is under control, compare business energy quotes to make sure you are paying a fair price for the gas and electricity you still need.

Frequently asked questions