Warehouse or distribution centre energy suppliers, tariffs and costs

Warehouse and distribution businesses in the UK face unique challenges when it comes to energy management. These facilities operate long hours and often require a significant amount of energy to maintain optimal conditions for storage and logistics operations. Ensuring energy efficiency can result in improved cost management and improved sustainability. Understanding the specific energy needs of your warehouse and distribution operations is crucial for effective energy management. This includes considering the types of energy used, the operational hours, and the energy efficiency of equipment. By carefully assessing these factors, businesses can make informed decisions about energy tariffs and suppliers, ultimately leading to more efficient and cost-effective operations.

How much does energy cost for a warehouse or distribution centre?

There is no published price list for warehouses and distribution centres. What a warehouse or distribution 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 warehouses and distribution centres?

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 warehouses and distribution centres 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 warehouses and distribution centres?

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

Warehouses and distribution centres typically have high energy demands due to lighting, heating, and the operation of machinery such as conveyors and forklifts. Energy usage can vary depending on the size of the facility and the nature of the goods stored or distributed. Many warehouses operate 24/7, which means continuous energy consumption. Facilities with large refrigeration units or climate-controlled environments may experience even higher energy use. It is essential for these businesses to monitor and manage their energy consumption effectively, to ensure both operational efficiency and cost control.

What affects energy bills for warehouses and distribution centres

The cost of energy for warehouse and distribution businesses can be influenced by several factors, including:

• Operational hours: Longer hours increase energy consumption.
• Equipment efficiency: Older or poorly maintained machinery can use more energy.
• Building insulation: Poor insulation can lead to higher heating and cooling costs.
• Energy tariffs: The type of tariff and supplier can significantly impact costs.
• Seasonal variations: Demand for heating in winter and cooling in summer can affect bills.

How to compare tariffs

When comparing energy tariffs for warehouse and distribution businesses, consider the following checklist:

• Assess your current energy usage patterns and needs.
• Evaluate different tariff structures, such as fixed or variable rates.
• Check for any additional fees or charges associated with the tariff.
• Consider the contract length and any exit fees.
• Look for green energy options if sustainability is a priority.

Gas or electricity: what matters most

In warehouse and distribution settings, electricity is often the primary energy source, powering lighting, machinery, and climate control systems. However, gas may also play a role, particularly in heating large spaces. The choice between gas and electricity will depend on factors such as the size of the facility, specific energy needs, and the cost-effectiveness of each option. Businesses should evaluate both energy types to determine the best mix for their operations.

How switching works

Switching energy suppliers for a warehouse or distribution business involves several steps:

1. Review your current energy contract and note any end dates or exit fees.
2. Compare offers from different suppliers to find a suitable tariff.
3. Contact the new supplier to initiate the switching process.
4. Provide meter readings as required to ensure accurate billing.
5. Ask your new supplier for the confirmed start date; your supply continues while the switch goes through.

More business energy guides

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