UK Energy Markets Monthly – A review of energy markets, plus non-commodity costs for 2026

Non-Commodity Cost Surge

With wholesale prices stabilising after the 2022 energy crisis, attention has turned to the fixed and policy-driven elements of UK electricity bills. Non-commodity costs now dominate commercial contracts because they recover the expense of maintaining and expanding the grid, balancing intermittent renewables, and funding legacy and new low-carbon schemes.

The immediate trigger for 2026 is Ofgem’s RIIO-3 price control period, which begins in April and authorises National Grid and the distribution networks to recover billions more for reinforcements needed to hit the government’s 2030 clean-power goal. NESO’s final TNUoS tariffs, published at the end of January 2026, confirm the sharpest year-on-year jump in a decade. At the same time the Regulated Asset Base charge for Sizewell C construction, introduced in December 2025, continues to climb, while Capacity Market costs are set to double.

The consequences are already measurable. For a typical medium-sized business the combined effect pushes total electricity costs up by roughly £25 per MWh even before any movement in wholesale prices. Multi-site operators face additional complexity from regional TNUoS differentials, while the fixed standing-charge component means savings from efficiency measures or lower consumption are partly offset. Sectors outside the narrow energy-intensive industries definition — hospitality, retail, data centres not in designated zones, and most manufacturers — absorb the full increase.

Less discussed is the distributional impact of the exemptions themselves. The British Industry Supercharger raises the network-charge discount for qualifying EIIs from 60% to 90% from April 2026, a welcome relief for steel, chemicals and glass plants. Yet the cost of those discounts is socialised across all other customers, widening the gap between protected and unprotected sites and raising questions about fairness in the transition. Broader fiscal support via the British Industrial Competitiveness Scheme is not due until 2027, leaving a 12-month exposure window for everyone else.