Data centre energy suppliers, tariffs and costs

Data centres and server hosting businesses are the backbone of our digital world, providing the infrastructure necessary for online services, cloud computing, and data storage. These facilities are energy-intensive, requiring constant power to maintain servers, cooling systems, and backup generators. Efficient energy management is crucial for these businesses to ensure reliable service delivery and control operational costs. With the rapidly increasing demand for data processing and storage capacity, data centres must continually adapt their energy strategies to maintain sustainability and competitiveness. Understanding the unique energy needs and exploring competitive tariffs can significantly impact the bottom line for data centre operators.

How much does energy cost for a data centre?

There is no published price list for data centres and server hosting businesses. What a data centre pays depends on how much it uses in a year, when it agreed its contract and for how long, wholesale prices at that time, the standing charge, meter type, payment method and credit history. The most recent government figures, for the second quarter of 2026 (April to June, provisional), put the average price paid by UK non-domestic customers at 24.51p per kWh for electricity and 5.28p per kWh for gas, including the Climate Change Levy and standing charges and excluding VAT. A year earlier the averages were 24.03p and 5.31p. Smaller users typically pay more per unit: businesses using under 20,000 kWh of electricity a year averaged 38.36p per kWh, and those using under 278,000 kWh of gas averaged 9.31p per kWh.

Source: Department for Energy Security and Net Zero, Prices of fuels purchased by non-domestic consumers in the UK (Quarterly Energy Prices tables 3.4.1 and 3.4.2), published 29 September 2026. Q2 2026 figures are provisional; next update 17 December 2026. Prices are fully delivered averages including the Climate Change Levy and all other elements except VAT, so standing charges are already spread across the units. Averages across every UK business in a band, not quotes, and not comparable with a supplier’s unit rate.

Working out a monthly figure for your business

Take the annual kWh from your latest bill or annual statement, find the band above and multiply for a rough benchmark. A site using 15,000 kWh of electricity a year sits in the very small band: 15,000 × 38.36p is about £5,750 a year, or roughly £480 a month before VAT. A site using 60,000 kWh of gas a year: 60,000 × 9.31p is about £5,590 a year, or roughly £465 a month. The bands are statistical groupings used by the government, not supplier price breaks, so treat them as a guide to what similar-sized sites paid rather than a price you will be offered. To judge an actual quote, compare its total annual cost (unit rate × your annual kWh, plus the daily standing charge × 365) with what you pay now.

VAT and the Climate Change Levy on business energy

The prices above exclude VAT. Business energy normally carries VAT at 20% plus the Climate Change Levy (CCL). HMRC applies the 5% reduced rate, with no CCL, in three cases. First, low usage: supplies averaging no more than 33 kWh of electricity a day (1,000 kWh a month) or 145 kWh of gas a day (4,397 kWh a month) are treated as domestic use whoever the customer is. Second, fuel and power for domestic use, which HMRC defines to include homes providing care for the elderly or disabled, children’s homes, hospices and school or university residential accommodation. Third, a charity’s non-business activities. From 1 October 2026 to 31 March 2027, electricity that qualifies for the reduced rate is charged at 0% VAT instead of 5% in England, Scotland and Wales; qualifying gas stays at 5%, qualifying electricity in Northern Ireland stays at 5%, and electricity returns to 5% from 1 April 2027. HMRC has not changed which supplies qualify or the certificate process; the same rules decide whether a supply gets 0% or 20%. Where a site is mixed, 60% or more qualifying use means the whole supply gets the reduced rate; below that the supply is split between the two rates, and the customer gives the supplier a certificate declaring the qualifying percentage. Source: HMRC VAT Notice 701/19 (sections 2.8, 3.2 to 3.5, 4.2 and 5.2, updated 5 February 2025), gov.uk VAT rates and HMRC Revenue and Customs Brief 10 (2026).

Do Ofgem’s microbusiness protections apply to data centres and server hosting businesses?

Ofgem treats a business as a microbusiness if it has fewer than 10 employees (or their full-time equivalent) and an annual turnover or balance sheet total of no more than £2 million, or if it uses no more than 100,000 kWh of electricity or 293,000 kWh of gas a year. A business can be a microbusiness for one fuel and not the other. Independent data centres and server hosting businesses that meet either test are covered by Ofgem’s microbusiness rules, which give extra protections around contract terms and renewals (Ofgem: get energy for your business).

Do business energy rates vary by region?

Yes. Part of every unit rate covers the cost of the local electricity distribution network, and Great Britain has 14 licensed distribution areas each with its own charges, so identical contracts are priced differently in, for example, the north of Scotland and London. DESNZ does not publish non-domestic prices by region, so regional figures quoted elsewhere are supplier or broker estimates rather than official statistics.

Which energy supplier is best for data centres and server hosting businesses?

There is no single answer. Suppliers price business contracts individually rather than publishing standard tariffs for data centres and server hosting businesses, so the cheapest supplier for one business is often not the cheapest for the next: each prices on the consumption, meter type, contract length and credit profile in front of it. Compare the total annual cost of like-for-like contract lengths rather than the headline unit rate, and check the standing charge and what happens when the contract ends before signing.

How data centres and server hosting businesses use energy

Data centres and server hosting facilities typically exhibit high energy consumption patterns due to the continuous operation of servers and associated cooling and security systems. Energy usage remains consistent throughout the day and night, with peak demands often aligning with maintenance activities and backup system tests. The energy demand is primarily driven by the need to maintain optimal temperatures to prevent hardware overheating, ensuring data integrity and uptime. Consequently, these businesses prioritise energy efficiency and innovative cooling solutions to manage their substantial energy requirements effectively.

What affects energy bills for data centres and server hosting businesses

Several factors influence energy bills for data centres and server hosting services, including:

• Type and efficiency of cooling systems used.
• Operational hours and server workload.
• Location and climate, affecting cooling demand.
• Energy efficiency of server hardware.
• Contract terms and tariff structure with energy providers.
• Implementation of energy-saving technologies and practices.

How to compare tariffs

When comparing energy tariffs for data centres, consider the following checklist:

• Evaluate the tariff structure: fixed vs variable rates.
• Consider the contract length and flexibility.
• Check for any hidden fees or charges.
• Look for green energy options to enhance sustainability.
• Analyse peak and off-peak rate differences.
• Examine the provider's track record in servicing data centres.

Gas or electricity: what matters most

For data centres, electricity is the primary energy source due to its role in powering servers and cooling systems. Gas is generally less relevant unless used for specific backup generation systems or heating needs. The focus for these businesses is typically on securing reliable, cost-effective electricity supplies while exploring renewable options to reduce carbon footprints. Efficient electricity management is vital to ensuring continuous uptime and operational efficiency.

How switching works

Switching energy providers for a data centre involves several key steps:

1. Review current energy contract terms and notice periods.
2. Collect and analyse energy usage data and requirements.
3. Research and compare potential providers and tariffs.
4. Negotiate terms and ensure they meet operational needs.
5. Coordinate the switch date to ensure uninterrupted power supply.

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