Mudi Abeysekera, Advisor – Decarbonisation of Complex Sites. Energy Systems Catapult.
Energy markets are changing rapidly due to fluctuating prices, new regulations, the push for sustainability, and advancements in technology. In recent years, organisations have faced rising energy costs, affecting their operations, profitability, and financial sustainability.
The energy market is becoming more flexible and dynamic, with the recent Review of Electricity Market Arrangements (REMA) signalling major reforms that will help to build a cleaner, more affordable, and secure electrical power system. Innovations in energy markets are reshaping how organisations buy, manage, and consume energy. The rollout of smart meters and the shift towards digitalisation are fuelling innovation, empowering retailers to offer a broader range of flexible, data-driven products and services tailored to consumer needs.
In this article we explore key developments that may change the way non-domestic customers interact with the energy markets in the coming years.
Time-of-Use Tariffs
Time-of-use (TOU) tariffs offer different prices for electricity based on the time of day, encouraging organisations to use more energy during off-peak periods when prices are lower. Traditional TOU tariffs, like Economy 7 and Economy 10, have long provided cheaper electricity rates at night. However, newer, more advanced TOU tariffs are now becoming available, adjusting prices in real time based on market conditions. For example, Octopus Energy’s Shape Shifters-Agile tariff offers half-hourly pricing linked to wholesale rates, allowing non-domestic consumers to optimise their energy usage and reduce costs.
Type-of-Use Tariffs
A type-of-use tariff is a pricing plan that offers different electricity rates based on how the energy is used, rather than the time of day. These tariffs are designed for specific technologies or appliances, such as electric vehicle (EV) chargers, heat pumps, or battery storage. For example, OVO Energy’s “Drive Anytime” tariff provides a lower rate for domestic customers charging EVs with a smart charger. While similar options are not yet widely available for non-domestic consumers, they could become an important way to reduce costs and support the shift to smart, low-carbon energy solutions.
Time-matched Tariffs
Time-matched tariffs ensure that the renewable energy you procure corresponds to your actual electricity consumption for each half hour period. This half-hourly time matching is crucial for truly reducing the carbon footprint across the energy system, supporting grid stability, and making the most of renewable energy when it’s available. This not only lowers costs across the energy system but also ensures your energy is genuinely green, giving organisations full transparency and control over their sustainability efforts.
Power purchase agreements (PPAs)
PPAs are increasingly being adopted by public sector organisations and large businesses seeking long-term price stability and renewable energy sourcing. These agreements allow businesses to procure electricity directly from renewable generators, locking in competitive rates for up to 25 years. While long-term contracts dominate, shorter-term PPAs (2-5 years) are also becoming available for operational assets, offering organisations greater flexibility.
Local energy clubs
Local community energy clubs are groups that bring together communities to invest in local renewable power generation. These clubs can help domestic and non-domestic customers in the local area access cheaper, green energy from nearby sources. Participants of these schemes contribute to local environmental goals, promoting local energy independence and reducing reliance on centralised energy systems. See energylocal.org.uk for case studies of local energy clubs.
Smart Electricity Exports
Onsite renewable generation can produce valuable surplus energy, which can vary significantly in market value based on the selling method used. With growing interest in self-electricity generation, organisations with solar panels or other renewable assets can now participate in rewarding energy export schemes. Companies like Open Power and other initiatives enable businesses to secure better returns on surplus energy exports.
Energy market intermediaries
Given the increasing complexity of the energy market, many non-domestic customers are turning to market intermediaries to navigate energy procurement decisions. These intermediaries offer market intelligence, price comparisons, collective/auto switching, contract negotiation, and risk management services, helping businesses secure the best deals while aligning procurement with sustainability objectives. As these energy market intermediaries are poised to play a growing role in the future energy retail market, it’s encouraging to see that Ofgem, the UK’s energy regulator, is considering regulatory oversight for these entities.
Flexible Power Schemes
Demand response and grid flexibility services, once the domain of large industrial users, are now opening up to SMEs and public sector sites with flexible energy assets. Companies like KiWi Power aggregate energy flexibility, enabling smaller organisations to participate in flexible power schemes and benefit from financial incentives. These programs allow organisations to generate an additional revenue stream by adjusting consumption during peak grid demand periods and managing on-site power generation using assets like batteries for power grid needs.
Conclusion
Energy markets are undergoing a profound transformation, driven by digitalisation, flexibility, and the push for sustainability. Innovations such as advanced tariffs, local energy clubs, PPAs, and smart electricity exports are reshaping how non-domestic customers engage with energy. As regulatory reforms like REMA take shape, organisations that proactively adapt to these changes, leveraging new procurement models, market intermediaries, and demand flexibility, will be best positioned to control costs, reduce risk, and meet their sustainability goals. To stay competitive, organisations must embrace these innovations and actively participate in shaping the future of the energy market.
This article appeared in the March 2025 issue of Energy Manager magazine. Subscribe here.