Hotel energy suppliers, tariffs and costs

Running a hotel involves a complex array of energy considerations, from providing guests with a comfortable environment to maintaining operational efficiency. Hotels typically operate 24/7, which means they have a constant need for energy, whether it's for heating, cooling, lighting, or powering kitchen and laundry facilities. As a hotel owner or manager, understanding your energy consumption patterns and finding the right energy tariff can significantly impact your operational costs. With the hospitality industry being highly competitive, optimising energy usage not only helps reduce expenses but also supports sustainability goals, which can be a selling point for eco-conscious guests.

How much does energy cost for a hotel?

There is no published price list for hotels. What a hotel 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 hotels?

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 hotels 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 hotels?

There is no single answer. Suppliers price business contracts individually rather than publishing standard tariffs for hotels, 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 hotels use energy

Hotels have a high and varied energy demand due to their 24-hour operations. Energy usage is heavily influenced by guest occupancy, with peaks often occurring during mornings and evenings when guests are most active. Key areas of consumption include guest room heating or cooling, water heating for showers and laundry, and kitchen appliances. Lighting, both in guest rooms and common areas, also contributes significantly to overall energy use. Implementing energy-efficient practices and technologies can help manage these demands effectively.

What affects energy bills for hotels

Several factors can influence the energy bills for a hotel:

• Occupancy rates: Higher occupancy increases energy consumption.
• Building size and age: Older buildings may be less energy-efficient.
• Seasonal variations: Heating in winter and cooling in summer can spike usage.
• Operational hours: 24/7 operations require constant energy usage.
• Energy efficiency measures: Use of energy-efficient appliances and lighting can manage costs effectively.

How to compare tariffs

When comparing energy tariffs for your hotel, consider the following checklist:

• Review your current energy consumption patterns and identify peak usage times.
• Look for tariffs that offer flexible rates to match your usage profile.
• Consider dual fuel tariffs if both gas and electricity are used extensively.
• Check contract terms and length, especially if planning future expansions.
• Evaluate the benefits of green energy tariffs to attract eco-conscious guests.

Gas or electricity: what matters most

For hotels, both gas and electricity are essential, but their importance may vary based on facilities. Electricity is crucial for lighting, electronics, and air conditioning, while gas is often used for heating and hot water. The choice between gas and electricity can depend on factors such as the size of the hotel, the climate, and the efficiency of existing systems. Balancing both efficiently can lead to improved cost management.

How switching works

Switching energy suppliers for your hotel involves several steps:

1. Review your current contract and check for any exit fees.
2. Compare available tariffs suited to your hotel's energy usage.
3. Select a new supplier and confirm the switch with them.
4. Provide the new supplier with your hotel's latest meter readings.
5. Ensure all outstanding payments with the current supplier are settled.
6. Monitor the switch to ensure a seamless transition with no disruption.

More business energy guides

Return to our business energy hub to explore guides for other industries, or go directly to our business gas or business electricity pages.

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