UK organisations begin 2026 with a clearer view of the forces shaping energy costs for the rest of the decade. Wholesale prices have steadied since the turbulence of 2022–23, but total electricity bills continue to rise as network charges and policy costs increase. Budget 2025 confirmed this overall direction and reinforced a system where fixed charges matter more than before.
Where the market stood before the 2025 Budget
Before the Chancellor delivered the 2025 Budget, several forces were already shaping the energy landscape for 2026.
1. Wholesale prices had stabilised.
Improved gas storage levels, better nuclear availability and reduced geopolitical risk had calmed the forward market compared with 2022–23. Many organisations coming off high-priced contracts were already seeing improved wholesale opportunities.
2. Network and policy charges were rising and becoming more fixed.
NESO’s published forecasts showed sharp increases in TNUoS charges from 2026 onwards. Most of these costs were set to be recovered through standing charges, making the number of meters and capacity levels more important than overall consumption.
3. Policy-driven line items were already increasing.
The nuclear RAB levy was scheduled to rise again in early 2026. Climate Change Levy rates were already confirmed to increase with RPI from April 2026. Market-Wide Half-Hourly Settlement was progressing as planned, creating stronger time-of-use signals.
Targeted reliefs and a focus on manufacturing
Government support is becoming more selective.
From April 2026, the uplift in NCC means eligible energy-intensive industries can receive up to a 90% discount on certain network charges. This delivers significant savings for steel, glass, paper, chemicals and other heavy users, but shifts a larger share of system costs onto customers that do not qualify.
The British Industrial Competitiveness Scheme (BICS), due to launch in 2027, follows the same logic. While rules are still being finalised, it is expected to reduce electricity costs for thousands of manufacturers in automotive, aerospace, clean technology and foundational supply chains by exempting them from several legacy policy costs.
For sectors outside these schemes, including logistics, data centres, retail, hospitality and many service businesses, there is little direct relief on the horizon. Their main options are efficiency, flexibility, better data and more strategic procurement.
Nuclear, networks and long-term costs
Budget 2025 confirmed nuclear power as a core element of the UK’s net zero and energy security strategy by bringing it into the UK Green Financing Framework. Sizewell C has reached financial close, the first small modular reactor site has been confirmed at Wylfa, and reforms aim to speed up regulation.
At the same time, RIIO-3 and NESO investment plans commit to major upgrades of transmission and distribution networks. These projects are essential for decarbonisation and security of supply, but they also anchor higher TNUoS and other network costs across the rest of the decade.
Carbon pricing and trade exposure
From January 2027 the CBAM begins to phase in for selected sectors, with indirect emissions potentially included from 2029. Combined with higher CCL rates, this raises the value of accurate emissions data and robust reporting, especially for trade-exposed manufacturers seeking reliefs.
Practical priorities for 2026
Against this backdrop, four priorities stand out for boards, CFOs and energy leaders.
1. Map non-commodity exposure meter by meter.
Break every supply into wholesale, network, levies and taxes. Overlay projected TNUoS increases, RAB charges and CCL rates to identify which sites face structural cost growth and which elements remain sensitive to procurement timing.
2. Secure eligible reliefs early.
If any part of the organisation could qualify for Energy-Intensive Industry status, Climate Change Agreements or future BICS support, ensure sector codes, metering arrangements and documentation are correct before schemes close or caps are reached.
3. Refresh the business case for flexibility and on-site assets.
Rising standing charges and sharper time-of-use signals strengthen the economics of on-site generation, storage, demand-side response and electrification of heat and processes. Investment appraisals in 2026 should use updated assumptions that reflect the growing weight of non-commodity costs.
4. Treat energy as a core financial risk.
Given the scale and irreversibility of nuclear and network investment, energy cost risk now sits alongside currency, interest rate and supply-chain risks. It warrants clear metrics, limits and decision points at board level, not isolated attention when contracts come up for renewal.
NGP can support by producing a detailed 2026 cost outlook across your full energy portfolio and by working with your team to align procurement, risk controls and investment choices with the cost structure now shaping the year ahead.