Energy procurement has stopped being a back-office task. With non-commodity charges climbing, half-hourly settlement on the way, and contract terms tightening, how UK businesses buy power and gas now has a direct effect on margin. We work with organisations that want to take the guesswork out of energy procurement and make contract decisions that hold up over time, not just at signing.
This guide walks through what’s changed, what to watch for, and how to put a sensible buying strategy together.
Why Energy Procurement Matters More in 2026
Wholesale prices have settled below the highs of 2022 and 2023, but the headline rate is no longer the main story. Non-commodity costs, the regulated charges added to every kWh, are now the bigger driver of total spend. By 2026 these charges are forecast to make up close to 60 per cent of a typical business electricity bill.
The clearest example is TNUoS, the charge that recovers the cost of the high-voltage transmission network. From April 2026, pass-through TNUoS rates rise sharply, with further increases expected each year through to the end of the decade. Distribution charges, capacity market levies and the Nuclear RAB are all moving in the same direction.
This means a contract that looks competitive on the unit rate alone can still leave you exposed. The better question to ask any supplier or broker is what the delivered cost looks like once every charge is loaded in.
The Three Main Energy Procurement Structures
Most UK businesses sit in one of three procurement structures, and the right choice depends on volume, risk appetite, and how much internal time you can give to the market.
A fixed contract locks in a single unit rate for the term, usually 12, 24 or 36 months. It is the simplest option, suits organisations with annual consumption below around 1 GWh, and gives finance teams a number they can budget against. The trade-off is that you take whatever price the market offers on the day you sign.
A flexible contract lets you buy in tranches across the term, so you can spread risk and act when the market dips. It works best for organisations using more than 10 GWh a year that have either an internal energy manager or a credible external adviser making the calls. Without active management, flex tends to underperform fixed.
Pass-through sits between the two. The commodity element is fixed, but non-commodity charges are passed through at actual cost. Given how fast those charges are rising, pass-through gives visibility but also leaves you carrying the regulatory risk in full.
For most mid-sized clients, a fixed contract on the commodity element with non-commodity treated transparently is the practical answer. If a tender does not show those components separately, ask why.
How to Run an Energy Procurement Tender
Auto-renewals and rollover rates remain one of the most expensive mistakes UK businesses make. A proper tender, even on a small portfolio, almost always beats sitting tight.
A few practical points we apply on every project:
Start early. At least six months before renewal for simple portfolios, and twelve to eighteen months for anything complex. Suppliers price better when they have time to work the deal.
Tender gas and electricity separately. Dual-fuel discounts in the business market are largely cosmetic. The cheapest gas supplier is rarely the cheapest electricity supplier.
Use clean, accurate consumption data. Half-hourly load profiles, recent invoices and meter details should all be in the tender pack. Suppliers price risk into anything they cannot verify.
Compare delivered cost, not headline rate. A small saving on the commodity rate can be wiped out by weak non-commodity terms, exit fees or cap and collar conditions.
Watch the contract clauses. Volume tolerance, change of law, and re-pricing rights are where commercial risk hides.
The Half-Hourly Shift Is Coming
Market-wide Half-Hourly Settlement, or MHHS, is the most significant change to UK electricity billing in twenty years. From late 2026, all non-domestic electricity meters move to half-hourly settlement.
For organisations with predictable, flat demand the change is mostly administrative. For those with peaky or erratic load, costs can move materially in either direction depending on when consumption falls. Businesses that prepare now, by understanding their load shape and where it sits relative to network peaks, will be the ones that benefit. The rest will pay more.
Buy Smarter, Not Just Cheaper
Good energy procurement is not about chasing the lowest unit rate. It is about reading the market, understanding the components of a bill, and making contract decisions that line up with your risk appetite and operating reality.
We work with UK businesses to put structure around procurement: building tender packs, running competitive processes, modelling delivered cost, and making sure the contract that gets signed is the right one for the next two or three years, not just for next month.
If you’d like a conversation about your next renewal, get in touch at www.gtconsulting.co.uk.