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Charity energy prices and rates
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Average charity energy consumption
DESNZ typically puts the median non-domestic building in England and Wales at around 6,600 kWh of electricity and 22,900 kWh of gas a year.
Most charity premises sit around or below that, because charities tend to occupy small buildings, a high street shop unit, an office floor, a day centre or a community hall, rather than large commercial sites.
Understanding and minimising your business energy consumption is the first step to controlling charity energy costs.
Charity electricity consumption
Lighting uses the most electricity, followed by kitchen equipment, water heaters and office computers. Small buildings use more electricity per square metre than large ones, around 94 kWh per square metre at 50 square metres or less against 44 kWh above 5,000 square metres, so a small shop or office is rarely as cheap to run as its size suggests.
Where the heating runs on electricity as well, the annual figure climbs well above that, and the table below shows how common that is in charity-run community buildings.
| Electric heating system | % of community buildings |
|---|---|
| Convector and fan heaters | 15% |
| Overhead radiant heaters | 11% |
| Heat pumps | 8% |
| Night storage heaters | 4% |
Charity gas consumption
Gas goes almost entirely to space heating and hot water for kitchens and toilets, with around 41% of charity-run community buildings on mains gas and a further 3% on LPG.
Charities often occupy premises nobody else wanted, a converted hall, an ageing office floor or an old shop unit, and those buildings lose heat faster than the newer stock a commercial tenant would take.
| Where heat is lost in an uninsulated charity building | Share of heat loss |
|---|---|
| Roof | 40% |
| Walls | 25% |
| Glazing and air infiltration | 25% |
| Floor | 10% |
Source: DESNZ Non Domestic National Energy Efficiency Data Framework, 2023 data
VAT and the Climate Change Levy on charity electricity
Charities pay less VAT on the energy they use for charitable work, and no Climate Change Levy on it. Neither relief is automatic, so you have to tell your supplier.
When can charities pay reduced rate VAT on electricity?
Energy used for charitable work is charged below the standard 20% rate.
Qualifying electricity in Great Britain is temporarily at 0% from 1 October 2026 to 31 March 2027, then back to 5%, while gas and Northern Ireland electricity stay at 5%. Any site using under 1,000 kWh of electricity a month gets the lower rate automatically, with no paperwork.
Business and non-business use
Non-business use is anything you do not charge for, such as grant-funded services, free advice and open community provision. Business use is anything you do charge for, including a charity shop, a paid cafe, ticketed events and room hire, even where the profit funds the cause.
HMRC changed this test in 2022 and now looks at each activity on its own rather than at your charity as a whole.
Mixed-use charity premises
Most charities do both, so the split sets the rate. If 60% or more of a site is non-business use, the whole supply gets the lower rate, and below 60% only that share does. It is worked out per site, so two of your buildings can end up on different rates.
Do charities pay the Climate Change Levy on electricity?
Not on electricity used for non-business activities. The climate change levy follows your VAT position, so one certificate to your supplier removes both.
Check your position with HMRC or your accountant before you certify anything. Note that VAT on business energy bills applies to the standing charge as well as the units.
How charities can reduce electricity costs
Close to 40% of charity-run community buildings heat with electricity, so heating controls count as an electricity measure as much as a gas one.
Here are five ways to improve business energy efficiency across a charity estate. If you are not sure where to start, a business energy audit will show you exactly where electricity is used.
Reduce out-of-hours electricity use
Charity sites are often closed for more hours than they are open, yet heaters, back office equipment and external lighting keep running overnight. Smart meters and business energy monitoring show the overnight baseline, which is usually the largest single piece of waste and the easiest to remove.
Replace lighting with LEDs
Charity shops light stock harder than most independent retailers so donated goods look sellable, which puts the lighting load above what the floor area suggests. In halls with high ceilings, where changing a lamp means hiring access equipment, LED lifespan saves more on labour than it does on electricity.
Light stockrooms separately
Rooms where donations are sorted, steamed and priced usually share a circuit with the shop floor and stay lit for the whole trading day. Wiring them separately with a movement sensor means they light up only when someone walks in.
Heat only when open
Shops keep fixed trading hours, community buildings run to a booking diary and small offices may only be staffed two or three days a week. Set the timer at each site to its own pattern rather than putting the whole estate on one schedule.
Sub meter space you let
Charities that sublet to a nursery, cafe or tenant group often pay for that usage without ever seeing it separately. Sub-metering shows which part of the building accounts for the consumption, so costs can be recovered or usage challenged.
Energy costs for charities
Charity sites are usually small users, which means business electricity prices and business gas prices tend to be quoted at the higher end of the market. Below, we cover the key factors that impact your charity energy bills.
Finding a competitive tariff
Volunteer trustees and small finance teams often miss a renewal date and end up paying out-of-contract rates, which are among the most expensive a supplier offers. Our experts can compare business electricity and compare business gas prices to find you a tariff that matches how your charity uses energy.
Consumption and efficiency
Working through the steps above reduces the amount of energy your buildings actually use, which lowers the kWh recorded on your meters. Fewer units used means a smaller business electricity bill and business gas bill at the end of each quarter.
Standing charges
Standing charges are fixed daily fees you pay on every meter whether the site is open or closed, and they vary significantly by region. Check business electricity standing charges and business gas standing charges alongside the unit rate, because a cheap unit rate does not always mean a cheap contract overall.
Best energy tariffs for charities
The best deal depends on how many sites you run, how predictable your income is and how often each building is open. These are the contract types that tend to suit charities.
Fixed price contracts
A fixed unit rate for one to three years gives you a known cost per kWh, which makes budgeting far easier when income arrives as grants and donations. Locking in a business energy contract early also protects you from a price rise landing partway through a funding year.
Multi-site contracts
Charities running a chain of shops, a head office, and a handful of centres can put every location on one multi-site business energy contract, a single contract covering all of them rather than a single tariff. It gives you one business energy renewals date and one point of contact instead of a diary full of separate end dates.
Green energy tariffs
A green business energy tariff switches every site to renewable sources without touching the buildings. Ask your supplier for the renewable energy guarantees of origin certificates behind it, because funders increasingly want evidence rather than a claim.
Renewable energy options for charities
Going greener doesn’t have to mean paying more. Below are the renewable options typically most suitable to charities in Britain.
Solar panels
Offices, day centres, storage units and community buildings often have large, simple roofs with little shading, which makes them well suited to commercial solar panels. A terraced shop unit rarely has the roof space to make it work, so start with your bigger sites where the ROI on a solar investment is strongest.
Battery storage
Solar generates through the middle of the day, which matches a shop or an office but not a building that fills up in the evening. Commercial solar batteries store the daytime surplus and release it when the demand actually arrives.
Funding solar without upfront capital
Most charities do not hold reserves large enough to buy a system outright. A solar PPA lets a third party install and own the panels while you buy the power they produce, usually below grid rates.
Charity energy – FAQs
Below, we answer your most commonly asked questions about charity energy use.
Do charities get cheaper electricity rates?
No supplier offers a charity tariff, and unit rates are set by how much you use, where you are and when you sign, rather than by charitable status.
What charities do get is the tax treatment covered above, which is usually worth more than the difference between one supplier and the next. Beyond that, the saving comes from choosing when to switch business energy rather than from status.
Can a charity reclaim VAT paid incorrectly on historic electricity bills?
Usually yes. Where you were eligible for the reduced rate but were billed at the standard rate, you can ask your supplier to correct the account and refund the difference, typically for up to four years. Put it in writing with a completed certificate covering the period concerned.
Can a charity landlord recharge electricity to tenants or occupiers?
Yes, and having an intermediary in the supply chain does not remove the relief, provided the supplier knows what the electricity is being used for. An intermediary that wants the levy taken off its own supply has to send its own qualifying use certificate to the supplier.
Can a newly registered charity get an electricity contract without a trading history?
Usually yes, though with no filed accounts a supplier may run a credit check and ask for a direct debit or a deposit, and fewer business energy suppliers will quote.
Have your charity registration number and trustee details ready when you ask for prices. If you are moving into premises someone else has left, the supply is handled as a change of tenancy and you will be on deemed rates until a contract is agreed.