Energy costs explained: Smarter bills, stronger sustainability
Written by Jim Thomas from Nova Solar Renewables Ltd
Making sense of your business energy costs
For many small and medium sized enterprises (SMEs), energy bills remain one of the top three overheads.
Yet research consistently shows that a large proportion of business owners admit they don’t fully understand what makes up their charges.
From wholesale energy costs and standing charges through to network fees and government levies, it can be difficult to see where your money is going - or whether you are paying more than you should.
What’s included in your energy bill?
Every bill will include some core details, such as:
• Bill & account references - including the bill date, number, and your account ID.
• Contract summary - outlining the key details of your energy agreement.
• Billing period - the dates your usage covers.
• Meter details (MPAN/MPRN) - unique numbers identifying your gas and electricity meters.
• Reading type - whether charges are based on actual or estimated meter readings.
Having clarity on these basics can already reduce confusion and make it easier to track energy spend over time.
Breaking down the charges
Typically, your bill will be split into:
• Usage charges - the cost of energy used during the billing period.
• Standing charge - a fixed daily fee for being connected to the network.
• VAT & levies - usually 20% VAT plus the Climate Change Levy (CCL), although smaller users may qualify for reduced rates.
• Outstanding balances - any unpaid amounts from previous bills.
Why do prices change?
Energy prices are influenced by far more than just your supplier. They fluctuate due to:
• Gas storage and supply availability
• Global oil prices and wider market demand
• World events and conflicts
• UK regulation and green energy policies
• Seasonal demand, with winter typically being higher
Understanding these drivers helps businesses recognise why prices can rise sharply at certain times and why forward planning matters.
The role of sustainability
Reducing energy demand is no longer just about saving money.
Businesses are increasingly judged by customers, employees, and supply chain partners on their sustainability credentials.
Cutting energy waste demonstrates a commitment to net zero goals and can strengthen reputation in a competitive marketplace.
Simple steps such as upgrading lighting, improving insulation, or adopting energy efficient equipment not only trim bills but also align a company with national carbon reduction targets.
For many SMEs, this reputational benefit can open doors to new contracts and partnerships, particularly where clients are required to evidence greener supply chains.
Practical steps for SMEs
While energy markets can feel complex, there are some straightforward actions businesses can take:
• Check meter readings regularly to avoid reliance on estimated usage.
• Review your contract end dates - many businesses roll over onto less favourable terms without realising.
• Monitor patterns of usage - for example, out of hours consumption may be costing more than expected.
• Consider efficiency measures - even small changes can bring meaningful savings.
• Explore available support - from government schemes to independent finance reviews, there may be untapped opportunities.
Food for thought
Energy will remain a significant cost for SMEs in the years ahead, but greater understanding can put business owners back in control.
By demystifying what appears on a bill and linking energy efficiency to wider sustainability goals, companies can not only save money but also strengthen their market position.
Even if your organisation isn’t yet ready to invest in renewables, gaining a clearer picture of how and where energy is being used could save thousands of pounds each year - while enhancing your reputation as a responsible, forward thinking business.