Nursing home energy suppliers, tariffs and costs

Operating a nursing home requires a reliable and efficient energy supply to ensure the comfort and safety of residents. With round-the-clock care and a variety of energy-intensive equipment, nursing homes face unique energy challenges. Balancing the need for warmth, lighting, and powered medical devices, while managing operational costs, is crucial. Energy usage in nursing homes can be substantial, making it important to explore competitive energy tariffs that suit their specific needs. A thorough understanding of energy consumption patterns and the factors influencing bills can help nursing home operators make informed decisions that improve energy efficiency and manage costs effectively.

How much does energy cost for a nursing home?

There is no published price list for nursing homes. What a nursing home 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.

Do nursing homes pay 5% VAT on energy?

For gas, usually yes. For electricity the rate is 0% until 31 March 2027 and 5% again from 1 April 2027 (Northern Ireland stays at 5%). HMRC treats fuel and power supplied to “homes providing care for the elderly or disabled, people with a past or present dependence on alcohol or drugs or people with a past or present mental disorder” as domestic use. Domestic use is charged at the reduced rate of VAT (normally 5%) rather than the 20% standard rate, and the Climate Change Levy does not apply to it. If part of the building is used for something that does not qualify, the 60% rule decides the treatment: where 60% or more of the energy is for the residential care use, the whole supply gets the reduced rate; below that, the supply is split between the reduced rate and 20%. Suppliers generally need a signed VAT declaration certificate from you, stating the qualifying percentage for each premises, before they apply the reduced rate to a business account, so check the VAT line on your bill and ask for the certificate if you are being charged 20%. When you compare quotes shown excluding VAT, the difference between the reduced rate and 20% matters for the like-for-like figure. Source: HMRC VAT Notice 701/19, sections 2.8 and 3.2 to 3.5 (updated 5 February 2025), and HMRC Revenue and Customs Brief 10 (2026), which keeps the qualifying rules and certificate process unchanged.

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 nursing homes?

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 nursing homes 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 nursing homes?

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

Nursing homes typically have high energy demands due to their 24/7 operation. Key areas of energy usage include heating, lighting, and the operation of medical and kitchen equipment. The need to maintain a comfortable temperature for residents means that heating systems are often used extensively, especially during colder months. Additionally, lighting is crucial not only for safety but also for creating a welcoming environment. Nursing homes also rely on various electrical devices and appliances, which contribute to overall energy consumption. Understanding these usage patterns is essential for managing energy costs effectively.

What affects energy bills for nursing homes

Several factors can influence the energy bills of a nursing home, including:

• Seasonal variations: Increased heating usage during colder months.
• Building size and layout: Larger facilities may consume more energy.
• Equipment efficiency: Older appliances may use more energy than newer, energy-efficient models.
• Occupancy rates: More residents can lead to higher energy consumption.
• Energy tariffs: The choice of energy tariff can significantly impact costs.

How to compare tariffs

When comparing energy tariffs for a nursing home, consider the following checklist:

• Review current energy usage to understand consumption patterns.
• Identify peak usage times and consider tariffs that offer lower rates during these periods.
• Look for fixed-rate tariffs to avoid unexpected price increases.
• Check for any additional fees or charges that may apply.
• Consider the length of the contract and any penalties for early termination.

Gas or electricity: what matters most

Nursing homes often rely on both gas and electricity to meet their energy needs. Gas is commonly used for heating and hot water, which are essential for maintaining a comfortable environment for residents. Electricity is crucial for lighting, running medical equipment, and powering kitchen appliances. Balancing the use of gas and electricity effectively can help manage overall energy costs and ensure reliable service.

How switching works

Switching energy suppliers can be straightforward if you follow these steps:

1. Gather details of your current energy contract, including end dates and usage figures.
2. Research and compare different energy tariffs tailored for nursing homes.
3. Contact potential suppliers to discuss your needs and obtain quotes.
4. Select a new supplier and confirm the switch, ensuring no disruption to service.
5. Inform your current supplier of your intention to switch and provide necessary notice.

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