Stephen Evans, Industry Costing Manager on the Optimisation Desk, nBS
The UK’s energy market is undergoing rapid change as clean power moves from ambition to reality. While businesses have become accustomed to understanding and managing the volatility of commodity prices, rising non-commodity charges now represent a more pressing challenge.
Delivering the scale of renewables to meet the UK’s clean power targets means building significant new infrastructure to connect and transport power. Around 5,500 kilometres (km) of new grid capacity is needed in the next five years, more than double what has been built in the past decade.
However, this transformation comes at a cost. Every business in the UK is now facing a sharp increase in non-commodity costs, which will help fund the infrastructure needed.
Given this context, it is perhaps not surprising that energy remains the top risk businesses are facing for the fourth year running, according to our Business Energy Tracker 2025, which draws on data from over 130 large energy users.
The report revealed that 79% of businesses predict their energy costs will rise over the next 12 months and more than half (54%) say they are having a negative impact on business confidence.
In addition, 97% of businesses surveyed said they are worried about the financial impact of the low-carbon transition, while half believe that non-commodity costs are unfair.
That said, while many respondents noted that standing charges have increased across their portfolios over the past year, there was support for the clean power mission. Many understood the benefits it would bring, and more than half (57%) also understood that they will need to bear some of the costs for the low-carbon transition.
So, where are these increases coming from?
Three charges in particular are likely to be impacted:
- Contracts for Difference (CfD) provide renewable generation developerswith a guaranteed price for power, ensuring new projects are financially viable. It is central to delivering Clean Power 2030, but comes at a cost. CfD charges could rise from around £10/megawatt hour (MWh) today to nearly £30/MWh by 2030
- Transmission costs will also rise. With the network needing to grow four times faster than in the last decade, operators expect their investment to double. For businesses, that means annual charges could also double. A customer in the lowest high voltage band, for instance, could see costs increase from £8,000 in 2025/26 to £25,000 by 2030/31
- Balancing costs are also likely to increase. These cover the cost of ensuring supply meets demand and are already heavily influenced by constraint costs, the payments to generators who cannot sell their output because the grid cannot accommodate it. Unless the grid expands in step with renewables, balancing costs could rise from £12/MWh now to around £20/MWh by 2030
Managing the non-commodity risk
While organisations cannot control policy or infrastructure costs, they can take steps to reduce their exposure. The Business Energy Tracker revealed that energy efficiency remains the top priority for managing risk, with 71% of respondents focusing on it as their primary strategy. For larger businesses with an annual energy spend of over £1 million, investing in on-site generation was another key measure, with 40% looking to make this investment.
Other measures included using energy management tools (40%), shifting energy demand to off-peak times (40%), switching to renewable energy (34%) and appointing an in-house energy specialist (32%).
For us, there are four ways that businesses can limit the impact of rising non-commodity costs:
- Reduce your energy consumption: while it’s difficult to control your non-commodity costs, you can control your energy consumption. Investing in energy efficiency and other energy reduction measures can have a positive impact on the amount you pay for energy.
- Consider on-site generation: any energy installed behind-the-meter (BtM) is not subject to industry costs such as Balancing Services Use of System (BSUoS), CfD or Capacity Market (CM) charges.
- Reduce your network capacity: if you are able to do this, then you can reduce your Distribution Use of System (DUoS) and Transmission Network Use of System (TNUoS) charges.
- Load management: this can be an effective way to reduce peak CM costs.
Building a clean power system that works for all
The transition to clean power is an absolute necessity. However, the Business Energy Tracker shows that the concerns about the short-term cost of the delivery and the impact this could have on confidence and competitiveness, are very real and need to be addressed.
We’re ready to work with the government to ensure that, while we build a cleaner and more stable energy system, businesses receive the right support to ensure they remain competitive now and in the future.
Business Energy Tracker 2025 – The cost of clean power: will your business pay the price? is available to download now. You can also use nBS’s Energy Cost Calculator to understand how non-commodity costs could affect your energy invoice.
This article appeared in the Nov/Dec 2025 issue of Energy Manager magazine. Subscribe here.