Nursery or childcare setting energy suppliers, tariffs and costs

Running a nursery or childcare business involves attending to the needs of young children and ensuring their environment is safe and nurturing. Among the many considerations that business owners in this sector face, managing energy costs is a crucial one. Nurseries require a consistent supply of electricity and possibly gas to maintain a comfortable and safe setting for children. From heating and lighting to powering essential appliances and equipment, energy consumption can be significant. Understanding the factors that influence energy usage and finding the most suitable energy tariffs can help reduce operational costs, allowing more resources to be dedicated to child care and development.

How much does energy cost for a nursery or childcare setting?

There is no published price list for nurseries and childcare settings. What a nursery or childcare setting 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 nurseries and childcare settings?

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 nurseries and childcare settings 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 nurseries and childcare settings?

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

Nurseries and childcare facilities typically have a consistent energy usage pattern due to the need for constant lighting, heating, and operation of various appliances throughout the day. These businesses often function during standard working hours and require a stable and comfortable environment for children. Additionally, kitchens may consume considerable energy due to meal preparations, and laundry services add to the energy demand. Understanding these patterns can help in selecting the right energy tariff that aligns with operational hours and energy needs, ensuring efficiency and cost-effectiveness.

What affects energy bills for nurseries and childcare settings

Several factors can influence the energy bills for nursery and childcare businesses, including:

• The size of the facility and number of rooms needing heating and lighting.
• The type and efficiency of heating and electrical systems in use.
• Operating hours and seasonal variations affecting heating and lighting needs.
• The age and insulation quality of the building.
• Usage of energy-intensive appliances such as kitchen equipment and washing machines.

How to compare tariffs

When comparing energy tariffs for nurseries and childcare businesses, consider the following checklist:

• Review your current energy usage and identify peak times.
• Consider fixed vs. variable rate tariffs based on your budget stability preference.
• Check contract terms for flexibility and exit fees.
• Look for tariffs that offer renewable energy sources if sustainability is important.
• Assess customer service ratings of energy providers.

Gas or electricity: what matters most

In nursery and childcare settings, both gas and electricity play vital roles. Electricity is crucial for lighting, operating appliances, and ensuring a safe environment. Gas may be used for heating and hot water, particularly in larger facilities. The choice between gas and electricity often depends on the existing infrastructure and the relative costs of each energy source. Evaluating the efficiency and cost-effectiveness of your current systems can help determine any need for adjustments.

How switching works

Switching energy providers involves several steps:

1. Gather recent energy bills to understand current usage and costs.
2. Research and compare offers from different providers.
3. Contact the chosen provider to initiate the switch, providing necessary business details.
4. Review and sign the new contract, checking for any specific terms or conditions.
5. Coordinate with the new provider to set a switching date, ensuring no disruption to service.

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