Energy Outlook 2026: Strategic Priorities for the Year Ahead

If 2025 felt confusing for energy markets, 2026 will feel downright contradictory. This year unfolds in paradox: an abundance of the fears we once dreaded, and a scarcity of the certainties we always believed would endure.

Over the last few decades, ‘energy security’ meant oil supply. Today, that’s almost quaint. The true constraint is no longer barrels - it’s electrons. Across the developed world, the commodity businesses crave most is reliable electricity that they can count on.

As investment is funnelled into keeping the grid running, non-commodity costs are climbing sharply, shifting the business challenge from managing energy commodity prices to managing these ever-growing infrastructure-related expenses.

Why is 2026 different?

In 2026, the energy crisis has evolved from a shortage of fuel to a shortage of delivery capacity. While wholesale markets have finally stabilised, the cost of maintaining the grid and delivering reliable, renewable electricity is reaching record highs.

Driven by the UK’s ‘Clean Power 2030’ ambitions, the government aims to modernize the grid with infrastructure investments estimated to cost around £60 billion. These significant network upgrade and policy costs are passed directly to consumers, bypassing traditional price hedging strategies.

These charges, known as non-commodity costs, are projected to increase significantly in the coming year. Npower anticipates that this upward pressure could raise electricity prices above £250/MWh by 2030, reinforcing the importance of identifying the primary cost components.

Which Non-Commodity Costs are Changing?

Several non-commodity costs are set to change from 2026, impacting energy bills for businesses. Key charges include network fees, government levies, and schemes supporting low-carbon generation.

Transmission Network Use of System (TNUoS)

Transmission Network Use of System (TNUoS) charges cover the cost of building, operating, and maintaining the UK’s high-voltage electricity network. These fees are passed to all consumers, homes and businesses, through energy bills, typically via the standing charge.

The National Energy System Operator’s (NESO) draft April 2026 forecasts suggest TNUoS charges may rise 50-100 % year‑on‑year, adding roughly £5-£10/MWh for many customers. Actual costs depend on location, demand, and network factors, so individual bills may differ significantly from the national average.

Contracts for Difference (CfD)

The Contracts for Difference (CfD) scheme guarantees renewable generators a fixed price per MWh. This gives investors certainty to fund new low-carbon capacity while protecting them from wholesale market volatility, supporting steady growth in clean energy.

DESNZ has confirmed that all new-build renewables under Clean Power 2030 will be funded through CfDs. Energy costs on invoices are expected to rise from around £10/MWh today to nearly £30/MWh by 2030, depending on wholesale prices.

Climate Change Levy (CCL)

The Climate Change Levy (CCL) is an environmental tax on business energy use. It encourages energy efficiency and lower carbon emissions, so the more efficiently a business operates and the cleaner its energy, the less CCL it pays.

In April 2026, the Climate Change Levy (CCL) on electricity and gas will rise with the Retail Price Index (RPI), increasing from 0.775 p/kWh to 0.801 p/kWh - equivalent to £8.01/MWh. Solid fuels rise similarly, although LPG remains unchanged.

Nuclear RAB Levy

The Nuclear Regulated Asset Base (RAB) Levy funds the development of critical infrastructure to expand the UK’s nuclear capacity, including the ongoing Sizewell C project. The levy, based on consumption, is set quarterly by the Low Carbon Contracts Company (LCCC).

The Interim Levy Rate (ILR) began at £3.494/MWh in December 2025 and will rise to £3.663/MWh in Q1 2026. A small operational levy of £0.0028/MWh also applies. The increase is a result of updated forecasts and a delay in implementing the levy.

Network Charge Compensation Scheme (NCCS)

The NCCS is a government levy designed to enhance the competitiveness of Energy Intensive Industries (EIIs). This charge recovers costs from suppliers, which are ultimately passed on to consumers, helping to offset part of the discounts granted to EIIs.

NCCS charges are expected to rise because Energy Intensive Industries (EIIs) receive partial exemptions from a range of non-commodity costs, which are refunded to them and recovered from other users. As TNUoS costs grow, so do EII exemptions, increasing NCCS charges.

Looking ahead, much of the anticipated increase in these charges is expected to be delivered through higher standing charges, limiting businesses’ ability to mitigate costs through more flexible or reduced energy consumption.

What are the Strategic Energy Priorities in 2026?

As with all market changes, embracing the challenges and knowing how to ‘play the game’ can transform uncertainty into lasting competitive advantage:

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.

Stress-Test Energy Your Portfolio

Assess exposure to changes in TNUoS, DUoS, and capacity allocation, particularly for sites with high peak demand, multiple meters, or planned expansion projects, as these factors can significantly impact overall energy costs and operational flexibility.

Rationalise Your Energy Estate

Assess whether smaller or seasonal sites justify their metering costs. Standing charges are on the rise, and reducing the number of metered sites or rationalising MPANs could help to directly cut costs.

Maximise Available Energy Incentives

Confirm eligibility for Energy-Intensive Industry status, Climate Change Agreements, or future BICS support by ensuring sector codes, metering, and documentation are correct before scheme closures or caps are enforced.

Rethink On-Site Generation & Flexibility

As standing charges climb and time-of-use signals intensify, the economics of on-site generation, storage, demand-side response, and electrification of heat improve markedly. Businesses must provision for investments that help reduce the impact of growing non-commodity costs.

Energy managers may also consider leveraging demand shaping, peak avoidance, and capacity optimisation to cut standing and network costs, albeit this may require upgrades to machinery or changes to existing operational patterns.

Prioritise Energy Data Reporting

Accurate, meter-level data is now foundational, and businesses should ensure ownership of energy data quality, emissions reporting, and cost attribution is clearly defined - supported by systems capable of handling half-hourly settlement and evolving reporting requirements.

Reduce Emissions to Offset Levies

As Climate Change Levy (CCL) hikes, the Carbon Border Adjustment Mechanism (CBAM) and stricter reporting mandates take hold, emissions performance is becoming a primary cost driver. Carbon reduction should be assessed not only for compliance and reputation, but for its impact on future tax, levy, and trade exposure.

Embed Energy into Core Financial Planning

Organisations already govern currency and interest-rate exposure with discipline and intent. Energy costs, shaped by irreversible nuclear and network investments, now belong in that same category-managed through explicit board-level metrics and decision rights, not revisited only when contracts expire.

Final Thoughts

Wholesale prices currently seem stable at around £8-£9 per MWh, but the delivered cost tells a different story. Once all fixed and policy charges are added, most businesses are looking at delivered costs of around 24–26p per kWh in 2026-27.

Non-commodity costs now account for up to 65% of your business energy bill, and businesses that take a strategic approach - embedding exposure into financial planning, leveraging incentives, and making informed site-level decisions - can turn energy into a lasting competitive advantage.

Need help? Big Energy Group can help assess your portfolio’s resilience by delivering a full cost outlook, ensuring your procurement, risk, and sustainability choices are aligned with the changing energy landscape. Contact us here to book a consultation.

About Big Energy Group

Big Energy Group is a privately held, British-owned energy brokerage with an established track record of helping clients successfully navigate the energy market. The company has offices in Harrogate and the Tees Valley and serves more than 500 businesses across the UK. For more information, please visit bigenergygroup.co.uk.