What Every UK Small Business Needs to Know About Energy Price Caps
If you’re running a small business in the UK, chances are you’ve noticed your energy bills creeping higher — or worse, spiking unexpectedly. And with so many headlines about “price caps” and energy support schemes, it’s easy to get confused about what actually applies to your business.
Here’s the truth: energy price caps don’t work the same for businesses as they do for households. While domestic customers benefit from Ofgem’s regulated price cap, small businesses operate under a different set of rules — and understanding them could save you hundreds (if not thousands) of pounds a year.
This guide is here to cut through the jargon and give you a clear, practical overview of how energy pricing works for small businesses, what support is available, and how you can take control of your costs in 2025 and beyond.
What Is the Energy Price Cap and Does It Apply to Small Businesses?
The UK’s energy price cap is a government regulation that limits how much energy suppliers can charge domestic customers — but it doesn’t apply directly to small businesses.
The price cap, set by Ofgem, is designed to protect households from unfairly high energy prices by setting a maximum rate for gas and electricity. However, non-domestic users, such as small businesses, don’t benefit from this cap in the same way.
Here’s a quick breakdown:
- Domestic customers: Protected by the Ofgem price cap
- Small businesses: Not covered, but may get government support through schemes like the Energy Bills Discount Scheme (EBDS)
Think of it like this: while households have a safety net, businesses must negotiate prices with energy suppliers, which can vary widely depending on contract terms, energy usage, and market rates.
Are Small Businesses Protected by an Energy Price Cap in the UK?
No, small businesses in the UK are not directly protected by the Ofgem energy price cap — but they can receive support through government discount schemes.
While households benefit from a regulated energy price cap that limits what suppliers can charge, businesses operate under different rules. Instead of a fixed cap, small businesses may qualify for government-backed relief programmes designed to cushion the impact of high energy prices.
As of 2024–2025, the key scheme available is the Energy Bills Discount Scheme (EBDS), which replaced the earlier Energy Bill Relief Scheme (EBRS).
Here’s how support works for small businesses:
- No fixed cap, but discounts apply to certain energy rates
- Eligibility depends on contract type and energy usage
- Relief is automatically applied by your energy supplier if you qualify
If your business agreed to a contract at a high rate during the energy crisis, EBDS may reduce what you pay — but it won’t cap your bill like it does for households.
How Does the Energy Price Cap Affect Business Energy Bills?
While the official energy price cap doesn’t apply to businesses, government discount schemes can still reduce your energy bill — depending on your contract and usage.
Small businesses don’t get the same price protections that households do. However, schemes like the Energy Bills Discount Scheme (EBDS) help reduce the unit rate for gas and electricity if it exceeds a certain threshold.
Here’s how it impacts your bills in real terms:
- If your contract rate is above the government’s baseline, you may get a discount per unit of energy.
- If your rate is below the threshold, you won’t get any discount — but you’re already paying a fair market rate.
- Discounts appear as automatic reductions on your energy invoices — no need to apply.
Think of it as a safety buffer, not a fixed ceiling. The more expensive your contract, the more help you might receive — up to a point.
Who Qualifies for the Energy Bills Discount Scheme (EBDS)?
Most UK small businesses with non-domestic energy contracts qualify for the Energy Bills Discount Scheme — but the amount of help you receive depends on your contract type and unit rate.
The EBDS was introduced to support businesses facing high energy costs, especially those locked into expensive contracts during the energy crisis. Unlike a blanket cap, the scheme targets specific thresholds to apply automatic discounts.
To qualify for EBDS, your business must:
- Be on a non-domestic energy contract (fixed, flexible, or deemed rates)
- Have signed your contract after 1 December 2021
- Pay a unit rate above the government’s baseline for gas or electricity
Bonus support for energy-intensive sectors:
Some industries (like manufacturing, steel, and cold storage) qualify for extra help under the “ETII” (Energy and Trade Intensive Industries) scheme.
A bakery on a fixed electricity contract at 35p per kWh may get a discount if the threshold is 30.2p — but a hair salon on a 27p rate would not.
What’s the Difference Between Domestic and Business Energy Caps?
The key difference is that domestic energy customers are protected by a regulated price cap, while business users rely on negotiated contracts and targeted discount schemes.
In the UK, Ofgem sets a price cap for domestic (household) energy customers. This cap limits how much suppliers can charge per unit of gas and electricity, offering predictability and protection.
For businesses, things work differently.
Here’s a simple comparison:
For domestic energy customers, the system is fairly straightforward. Ofgem sets a price cap that limits how much suppliers can charge per unit of gas and electricity. This gives households a level of protection and predictability.
In contrast, business energy customers don’t benefit from a fixed price cap. Instead, they rely on contracts negotiated directly with energy suppliers — and support schemes like the Energy Bills Discount Scheme (EBDS) are only applied in certain cases.
Ofgem price caps apply to households, but not to businesses.
- Households enjoy fixed unit rate limits, whereas businesses don’t.
- Government support for domestic customers is automatic, while business support is targeted and conditional.
- Residential customers are usually on standard tariffs, but businesses often deal with fixed, flexible, or deemed contracts.
- And while household rates are less exposed to market volatility, business rates can fluctuate significantly depending on wholesale prices and contract terms.
Think of it like this: households have a safety net, but businesses need to shop around, negotiate, or rely on support schemes like EBDS.
That’s why it’s so important for small business owners to review their contracts regularly and understand what support is currently in place.
Can You Switch Business Energy Suppliers if You’re on a Discount Scheme?
Yes, small businesses can switch energy suppliers even if they’re receiving a discount through a government scheme — but timing and contract terms matter.
Being on the Energy Bills Discount Scheme (EBDS) doesn’t lock you in with your current supplier. You still have the freedom to shop around for better rates or a more suitable contract. However, it’s crucial to check your existing contract for exit fees, notice periods, or any fixed-term restrictions before making a move.
When switching suppliers, keep in mind:
- EBDS discounts are applied automatically, regardless of your supplier
- Compare like-for-like unit rates to ensure real savings
- Use a business energy broker if you’re unsure how to evaluate options
If your contract is due to end in a few months and your rates are high, switching to a new fixed-rate deal may lower your bills — with or without government discounts.
How to Reduce Your Small Business Energy Bills in 2025
To cut your energy bills in 2025, small businesses should focus on improving energy efficiency, reviewing contracts regularly, and making smart operational changes.
Energy prices may be unpredictable, but your business can still take control of its usage and spending. You don’t need to invest in expensive tech to see results — even small changes can have a big impact over time.
Here are practical ways to reduce your energy costs:
- Review your energy contract annually — don’t let it roll into costly out-of-contract rates.
- Switch to LED lighting — cuts lighting costs by up to 80%.
- Use smart meters — track real-time usage and avoid estimated bills.
- Turn off equipment overnight — printers, coffee machines, and signage can drain power while idle.
- Invest in insulation — especially for shops or offices with older buildings.
- Train staff on energy-saving habits — awareness reduces waste.
One small bakery saved over £1,200 a year just by scheduling ovens and refrigeration more efficiently.
Saving energy doesn’t mean cutting corners — it means using what you need more wisely.
Is the Energy Bills Discount Scheme Still Available in 2025?
Yes, the Energy Bills Discount Scheme (EBDS) remains available in 2025, but with some limitations on eligibility and the level of support.
The UK government introduced EBDS in April 2023 to help non-domestic energy users, including small businesses, cope with high energy prices. As of now, the scheme is still active, but support is less generous than in earlier emergency programmes, like the Energy Bill Relief Scheme (EBRS).
Key facts about EBDS in 2025:
- It’s set to run until 31 March 2025
- Discounts apply only if your unit rates exceed set thresholds
- Support is automatic — no application needed
- Some energy-intensive sectors get extra relief
A shop paying 34p per kWh may receive a discount, while one paying 27p won’t — because it’s already under the government’s baseline rate.
To check if your business qualifies, review your energy contract or speak with your supplier directly.
FAQ: Common Questions About Energy Price Caps for Businesses
Here are answers to the most common questions UK small businesses ask about energy price caps and related support schemes.
- Do small businesses have an energy price cap like households?
No, small businesses are not covered by the Ofgem energy price cap that applies to homes. Instead, businesses rely on contracts negotiated with suppliers and can benefit from government schemes like the Energy Bills Discount Scheme (EBDS), which offers targeted relief based on energy rates.
- What is the Energy Bills Discount Scheme (EBDS)?
EBDS is a government programme that helps businesses reduce their energy costs when prices exceed a certain threshold. It provides automatic discounts on gas and electricity bills for eligible contracts, easing the burden of high market prices.
- Can my business switch energy suppliers if I’m receiving government support?
Yes, switching suppliers is allowed and often recommended to find better deals. However, check your current contract for exit fees or notice periods. Government discounts apply automatically regardless of supplier.
- How do I know if my business qualifies for energy bill support?
Qualification depends on your contract type, when it was signed, and the unit rate you pay. If your rates are above government-set baselines, your supplier should apply discounts automatically. Reviewing your contract or contacting your supplier is the best way to confirm.
- Will fixed-rate contracts protect my business from rising energy costs?
Fixed contracts can provide cost certainty by locking in rates for a set period. However, if your fixed rate is higher than current market discounts, you might still pay more. It’s important to weigh the benefits and monitor market changes regularly.
- Are microbusinesses treated differently under energy price support schemes?
Microbusinesses (very small companies with low energy consumption) often receive different or additional support. Some schemes target microbusinesses specifically, but eligibility rules vary. It’s worth checking official government guidance for your sector.
- What steps can I take if my supplier isn’t applying the correct discounts?
If you suspect your energy supplier isn’t applying government discounts properly, contact them directly for clarification. You can also reach out to Ofgem or seek advice from a business energy broker to ensure you’re getting the support you’re entitled to.
Small businesses don’t have a direct energy price cap but can benefit from government relief schemes. Staying informed about your contract, supplier, and available discounts helps you manage energy costs effectively.
Final Thoughts: What UK Small Businesses Should Do Next
Managing energy costs is a crucial challenge for UK small businesses today. While the official energy price cap doesn’t cover business customers, there are still government schemes and practical steps you can take to ease the burden.
First, review your current energy contract carefully. Understand what you’re paying per unit and whether your supplier is applying any available discounts like those from the Energy Bills Discount Scheme (EBDS). Don’t hesitate to ask your supplier for a clear breakdown if anything seems unclear.
Next, consider shopping around and comparing offers from different energy providers. Switching suppliers could lead to significant savings, especially if your contract is due to end or if you’re currently on a high-rate deal.
Energy efficiency also plays a big role — simple changes like using energy-saving lighting, turning off unused equipment, and improving insulation can add up to real savings without major investments.
If navigating all this feels overwhelming, consider working with a business energy broker or advisor. They have the expertise to find the best deals and help you understand the fine print.
Ultimately, staying proactive, informed, and engaged with your energy costs will give your small business better control and help protect your bottom line in uncertain times.
