Food processing business energy suppliers, tariffs and costs

Food processing businesses in the manufacturing sector face unique energy challenges and opportunities. These businesses typically operate with high energy demands due to the need for constant refrigeration, heating, and operation of machinery involved in processing food products. Energy efficiency and cost management are vital to maintaining competitiveness and sustainability. Understanding energy usage patterns and how to optimise them can significantly impact operational costs. This guide provides insights and tips for managing energy consumption effectively in the food processing industry, helping businesses make informed choices when comparing energy tariffs.

How much does energy cost for a food processing business?

There is no published price list for food processing businesses. What a food processing business 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 food processing 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 food processing 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 food processing businesses?

There is no single answer. Suppliers price business contracts individually rather than publishing standard tariffs for food processing 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 food processing businesses use energy

Food processing facilities have a unique energy usage profile characterised by continuous operation of refrigeration systems, heating for cooking and pasteurisation, and energy-intensive processing machinery. This industry often runs 24/7 to ensure product freshness and meet production demands. Energy consumption is generally stable but can peak during certain processing phases or seasonal demand spikes. Understanding these patterns can help businesses identify opportunities for energy savings and efficiency improvements.

What affects energy bills for food processing businesses

Several factors can affect energy costs for food processing businesses, including:

• Seasonal variations in production levels, which can lead to fluctuating energy demands.
• Efficiency of refrigeration and processing equipment.
• Operational hours and shifts, impacting overall energy consumption.
• Energy policies and tariffs that vary by region and provider.
• Implementation of energy-saving technologies and practices.

How to compare tariffs

When comparing tariffs, consider the following checklist:

• Assess your current energy usage and identify peak demand periods.
• Look for flexible tariffs that accommodate fluctuating energy needs.
• Check for green energy options if sustainability is a priority.
• Review contract terms, including length and any associated fees.
• Evaluate customer service and support offered by providers.

Gas or electricity: what matters most

The relative importance of gas and electricity in food processing varies depending on the specific processes involved. Electricity is crucial for refrigeration, lighting, and running machinery, while gas may be more relevant for heating and certain cooking processes. Balancing the use of both energy types efficiently can help manage costs and reduce environmental impact.

How switching works

The switching process for energy providers typically involves the following steps:

1. Review your current energy contract and note any end dates or termination fees.
2. Collect recent energy bills to understand your usage patterns.
3. Research and compare offers from multiple providers.
4. Contact your chosen provider to initiate the switch.
5. Coordinate the transition to avoid disruptions in service.

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