School business energy

Schools, colleges and universities buy gas and electricity on non-domestic contracts, but many do not buy like ordinary small businesses. They are often part of a council, a multi-academy trust or a public-sector purchasing arrangement, with procurement rules, big annual volumes and a heating load driven by term dates. This page explains how school energy is usually bought, where it differs from small-business energy, and what to check on tax and contracts.

Who buys the energy?

The answer varies, and you should confirm yours before you do anything:

• Local-authority maintained schools are sometimes covered by a council-wide arrangement, in which case the school may have little or no choice of supplier.
• Academies and trusts usually hold their own accounts and often buy through a framework or a buying group.
• Independent schools, nurseries and small colleges typically buy like any commercial customer.

The Department for Education's find-a-framework service lists the Crown Commercial Service (CCS) framework as a recommended route for energy. It covers electricity and gas supply for public sector bodies, billing, administration, advice on reducing energy or carbon, and automated meter reading. The listing does not name schools specifically, so check with your trust, council or the framework operator that you are eligible. Buying through a framework means a supplier has already been competitively selected and the terms pre-agreed, which can simplify procurement; check your own procurement rules, or your trust or council's, before you buy.

Are schools micro or small businesses?

Ofgem's tests are about size of business and energy use, not sector, and a school can pass any one. A primary school using under 100,000 kWh of electricity a year is a microbusiness for electricity; one using under 293,000 kWh of gas is a microbusiness for gas. Larger secondary schools and colleges may be small (up to 200,000 kWh electricity or 500,000 kWh gas, or under 50 employees and turnover up to £6.5m) or neither. See what counts as a microbusiness. Check each fuel separately. Being micro or small gives access to the Energy Ombudsman; micro status also gives extra protection on notice, rollovers and back-billing.

Note that when a school buys through a public-sector framework, the framework agreement and its contract may set the terms for complaints and renewals, so read those alongside Ofgem's rules.

Worked example: a primary school

A primary school uses 90,000 kWh of electricity and 250,000 kWh of gas a year. Using the small-business averages from Moneysupermarket Business (21 October 2026): electricity 27.2p/kWh plus 118.9p/day, gas 8.5p/kWh plus 49.5p/day (indicative comparison-site averages).

Item	Sum	Cost
Electricity units	90,000 × £0.272	£24,480.00
Electricity standing	365 × £1.189	£433.99
Gas units	250,000 × £0.085	£21,250.00
Gas standing	365 × £0.495	£180.68
Before VAT		£46,344.67

A 1p/kWh difference on electricity is £900 and on gas £2,500, so about £3,400 a year between two quotes that differ by 1p on both. A school with ten sites to buy for multiplies that.

The heating profile is also special: heavy use from October to March, little in summer holidays. Ask a supplier how they treat low-use months and whether the standing charge or capacity charges bite when the buildings are empty. See paying standing charges when closed.

VAT and Climate Change Levy

HMRC's fuel and power notice says educational institutions with charitable status are reduced-rated (5%) when they receive supplies for non-business use. Many state schools and academy trusts are exempt charities, but whether your energy is non-business depends on your activities, such as paid lettings, a nursery charging fees or a commercial catering operation. If 60% or more of the supply is for qualifying use, the whole supply is reduced-rated; below that, only the qualifying share is.

From 1 October 2026 to 30 June 2027, qualifying electricity in Great Britain is temporarily zero-rated, then it reverts to 5%. HMRC first set the end date as 31 March 2027; Budget 2026 extended it. For a school with qualifying use, VAT on the electricity in our example would be nil in that period.

The Climate Change Levy (0.801p/kWh from April 2026) does not apply to charities for non-business use. On 90,000 kWh that could be £720.90 a year, and on 250,000 kWh of gas £2,002.50, so confirm your levy treatment on your bill. Our guides: what VAT charities pay and reduced-rate declarations.

Contract structure for public bodies

• Flexible or basket purchasing. Frameworks and buying groups often buy in tranches over time, which can smooth price shocks but removes the certainty of a fixed price.
• Pass-through of network and policy costs. Understand what is fixed and what can change. See non-commodity charges.
• Half-hourly meters. Larger schools and colleges are likely to be on half-hourly meters.
• Green electricity. If your trust has net zero commitments, ask for evidence behind a green label. See are green business tariffs really green?

Cutting the bill

The biggest levers are controls and building fabric: heating timers matched to term dates, zone controls, boiler maintenance, LED lighting and monitoring. Pupil-led energy projects are a bonus. For funding, see grants for energy efficiency; public-sector funding schemes are separate and change often, so we do not list them here.

Key dates and who to tell

Schools plan budgets a year ahead, so a contract end date that arrives mid-term can disrupt things. Put the end date and the supplier's renewal window in the business manager's calendar, and let the finance lead know before quotes expire, since quoted prices are normally held only for a short time. When buildings change use, for example a new nursery wing or a community lettings programme, tell the supplier because it may affect the VAT declaration and your meter set-up.

If an energy bill looks wrong, complain first to the supplier. If it remains unresolved after eight weeks, or you get a deadlock letter, a micro or small organisation can use the Energy Ombudsman. See energy disputes and the Ombudsman.

Next steps

1. Confirm who holds the energy contract: the school, the trust or the council.
2. List all meters (MPANs and MPRNs) with annual kWh. See finding your MPAN and MPRN.
3. Establish your charity VAT position and give declarations to the supplier.
4. Diary the end date of the current contract and the framework call-off window.