Last Thursday, Ofgem approved a whopping £28.1bn budget for the UK’s energy network operators to fund infrastructure investments over the next five years.
As this money is recoupled via the transmission charges added to gas and electricity invoices, large consumers – including businesses in the cold chain sector – are going to see significant increases in their energy costs.
“For example, if we assume that the 75% increase in electricity network budgets translates to a 75% increase in the Transmission Network Use of System-TNUoS charge added to electricity invoices from April 2026, consumers are potentially looking at an increase of around £16 per megawatt hour,” explains Stephen Evans, Industry Charging Manager for npower Business Solutions.
“We’ll be able to pin down more exact costs in January, when the National Energy System Operator -NESO confirms its TNUoS tariff, – and the gas transmission-LDZ charges are set by the Gas Distribution Network Operators.”
For a business in the cold chain sector, TNUoS increases alone could result in an annual increase of £160,000 for every 10GW of energy consumed. This is on top of all the other rising non-commodity costs due to hit invoices from April 2026.
To provide more context around Ofgem’s budget announcement, the government’s Clean Power 2030 commitment – which is to generate 95% of the UK’s power from carbon-free sources by the end of this decade – will require the same level of investment in the cables and wires required to deliver new low-carbon power to consumers as the cost of all the new-build renewable assets themselves.
Stephen Evans shared more analysis of this – and the full £/MWh impact of all the other rising non-commodity charges – during last week’s Energy Insight webinar. He also outlined four steps consumers can take to reduce costs.
You can watch his session in full here.
Some better news on commodity costs
While the non-commodity element of electricity costs may be rising to eye-watering levels, there is at least more positive news on the commodity front.
In the same webinar, Client Portfolio Manager Emma Trevor shared some encouraging signs for the wholesale electricity market outlook this winter.
“For example, we are going into winter with a comfortable power generation margin of 6.1GW, which is the equivalent of 10% of the UK’s peak power demand,” explains Emma. So even in the event of a cold snap, a ‘lights out’ scenario is far less likely.
Two new wind firms that came online this year are also reducing pressure on gas-fired power generation.
In addition, an increase in global liquified natural gas-LNG production – expected to reach 150% of today’s levels over the next five years – is also reducing pressure on gas prices.
“But geopolitical events – for example, the ongoing Russia/Ukraine conflict and tensions in the Middle East – always have the potential to de-stabilise the markets,” says Emma.
Again, you can watch Emma’s presentation in full, along with the latest updates on the government’s Review of Electricity Market Arrangements (REMA) and some insight into business sentiment around energy prices and the sort of government support they’d like – in the full Energy Insight webinar here.
