Written by Graham Paul – Service Delivery Director
With over twenty years of experience in the energy sector, Graham leads service delivery, sales and marketing to enhance customer experience and scale TEAM’s carbon and energy services with a data‑driven, outcomes focus.
The Traditional Model Has Been Under Pressure
The UK I&C business electricity supply market has historically been built on a clear principle: competition drives lower costs through procurement efficiency and price differentiation.
For large energy users, procurement strategies have typically focused on:
- Securing competitive fixed or flexible contracts
- Managing exposure to wholesale market volatility
- Optimising purchasing timing.
However, the market context is changing rapidly.
Electricity is no longer just a cost to be minimised. It is becoming a strategic lever for operational performance, carbon reduction and ESG delivery.
At the same time:
- Electricity demand is expected to increase significantly as businesses electrify operations and assets
- Price volatility remains a persistent risk in global energy markets
- Regulatory and reporting pressures are increasing.
This creates a fundamental shift in how businesses evaluate suppliers.
Watch the explainer video below for a concise overview of how UK business electricity suppliers are evolving beyond price competition to support energy management, data-driven decision-making and Net Zero delivery.
Why Price Alone Is No Longer Enough
Price is constrained by market and regulation
In the UK I&C electricity market, only around one-third of costs relate to the energy itself. The majority is driven by network charges, system costs and policy levies, with supplier margins accounting for only a small single-digit percentage.
This fundamentally limits price-based competition and constrains how far suppliers can differentiate on cost alone.
Evidence from UK non-domestic electricity pricing data, combined with Ofgem methodologies and published industry bill breakdowns, shows:
- Wholesale energy typically accounts for only 30-36% of an I&C electricity bill, representing the market-driven cost of purchasing power
- Non-commodity costs, including network charges, balancing costs and policy levies, make up the majority (typically 60-70%) of total costs and are largely regulated or externally set
- Supplier costs and margin are a very small component (typically 3-6%), limiting the ability of suppliers to compete on price alone.
For a representative UK business electricity bill (2025–2026):
- 31-36% wholesale energy
- 20-30% network and system costs (DUoS, TNUoS, BSUoS)
- 25-35% policy and environmental levies (e.g. RO, CfD, Capacity Market, CCL)
- 3–6% supplier margin and operating costs.
This demonstrates that most electricity costs for I&C customers are outside supplier control, being driven by wholesale markets, regulated network infrastructure, and government policy mechanisms.
This position is supported by industry bill breakdowns based on published third‑party charge components, which show non‑commodity costs (network, policy, balancing and related charges) make up the majority of business electricity bills.
Corporate energy strategies are evolving
Businesses are actively managing energy as part of broader operational and sustainability strategies, including electrification, onsite generation and efficiency programmes.
Net Zero is now a commercial requirement
Procurement teams are under pressure to demonstrate progress against carbon reduction targets, often extending beyond Scope 1 into Scope 2 and supply chain emissions.
In this environment, a “cheapest supplier” approach increasingly fails to meet business needs.
The Shift from Supplier to Energy Management Partner
Business energy suppliers are no longer simply a provider of power. They have becoming part of a wider energy management UK ecosystem.
This shift reflects a move from:
Transactional supply → Strategic partnership.
In their report Four trends improving B2B energy propositions, McKinsey highlights that around 70% of businesses are willing to engage in long-term partnerships with energy suppliers to meet evolving energy needs, reflecting a shift towards more strategic, relationship-driven procurement models.
These relationships are focused on delivering outcomes, not just supply.
The Role of the I&C Business Electricity Supplier
To remain relevant in the UK market, electricity suppliers are expanding beyond traditional procurement services and contribute directly to customer outcomes.
This Evolution Is Already Underway
While this transition represents a future direction for the market, leading UK I&C suppliers have already expanded their capabilities beyond traditional electricity supply.
A key area of this evolution is the growth of behind-the-meter (BTM) solutions – services and technologies deployed on the customer side of the electricity meter, enabling organisations to generate, store and optimise energy directly within their own operations.
Across the market, suppliers are now actively offering integrated behind-the-meter capabilities spanning three core areas:
On-site generation
- On-site renewable generation such as solar PV and small-scale wind
- Combined Heat & Power (CHP)
- Backup generation (e.g. gas engines).
These solutions enable organisations to directly offset grid consumption and improve energy resilience.
Energy storage
- Battery storage systems integrated with on-site generation or grid supply.
Storage allows organisations to shift energy usage, reduce peak demand costs and improve operational flexibility.
Flexibility and electrification
- Demand-side response (DSR) and flexibility programmes
- Electric vehicle (EV) charging infrastructure and smart load management.
These services enable organisations to actively manage demand, respond to system signals and support wider grid stability, while progressing electrification strategies.
Behind-the-meter solutions reflects a broader transition from supplying energy to enabling organisations to actively manage energy usage, cost and carbon reporting performance on-site.
Supporting Structured Energy Procurement Strategies
Suppliers now support a range of procurement approaches aligned to risk and performance:
- Fixed price contracts for certainty
- Flexible purchasing strategies
- Hedging against wholesale volatility
- Integration with broader energy strategies.
Enabling Renewable Procurement Through PPAs
PPAs are a core mechanism enabling:
- Long-term price stability
- Renewable sourcing linked to generation assets
- Alignment with Net Zero targets.
Delivering Energy Management Solutions
As energy systems become increasingly digitalised and complex, the value of the supplier-customer relationship is shifting beyond commodity supply towards data, insight and optimisation.
For Industrial and Commercial (I&C) organisations, future-focused suppliers will be expected to deliver:
- Advanced consumption analytics and reporting
- Carbon analytics aligned to ESG and regulatory frameworks
- Demand profiling, forecasting and optimisation
- Seamless integration with enterprise energy management software and carbon reporting platforms
- Scalable Application Programming Interface (API) data feeds for near real-time access to supplier data.
Organisations are seeking integrated, system-to-system connectivity, enabling supplier data to flow directly into internal platforms for:
- Energy performance monitoring
- Carbon accounting and carbon reporting
- Financial and operational analysis.
As a result, suppliers that can provide open, interoperable and API-enabled data solutions will be better positioned to meet the needs of organisations navigating increasingly complex energy and sustainability challenges.
This shift is being further accelerated by ongoing digitalisation across the UK energy system. As outlined in our Market Briefing on digitalisation in the UK energy sector, the transition towards a more data-driven and decentralised energy management systems is fundamentally changing how electricity is measured, managed and optimised.
One of the most significant catalysts for this change is Ofgem’s Market-Wide Half-Hourly Settlement (MHHS) programme. MHHS is designed to improve the accuracy of electricity settlement and enable a more flexible, data-driven energy system transitioning settlement to be based on half-hourly demand (and generation where relevant) data from all meters.
For Industrial and Commercial organisations, this creates both opportunity and complexity. Suppliers will need to support:
- More high-frequency consumption data flows across half-hourly intervals
- More sophisticated demand profiling and forecasting capabilities
- Enhanced settlement accuracy and cost visibility
- Integration of interval data into customer-side energy management and carbon reporting systems.
This programme forms part of Ofgem’s wider regulatory reforms aimed at improving settlement accuracy and enabling a more flexible electricity system.
This represents a step change in data availability across the UK business electricity supplier market. It also reinforces the growing importance of robust, scalable and interoperable data infrastructure to support increasing volumes of settlement and reporting data.
In this context, traditional supplier web portals for downloading invoices or consumption data become insufficient. Instead, organisations will expect automated, system-to-system data integration that enables near real-time visibility, advanced analytics and seamless incorporation into enterprise energy management and sustainability platforms.
Digitalisation is therefore not just enhancing existing supplier services – it is redefining the data capabilities required to operate effectively in the UK I&C electricity market.
In parallel, suppliers have expanded into:
Integrating ESG And Compliance Considerations
Energy procurement is now linked to:
- Carbon reporting frameworks
- Energy and carbon consulting
- Certification and regulatory schemes.
Competing On Price vs Competing on Outcomes
The Legacy Model
- Price-focused
- Short-term switching
- Limited engagement.
The Emerging Model
- Total cost of energy focus
- Long-term partnerships
- Integrated energy management.
What Does the Future Supplier Look Like?
The suppliers deliver across multiple dimensions:
- Energy management capability
- Net Zero enablement
- Procurement expertise
- Data-driven decision support
- Long-term collaboration.
Implications For UK Businesses
Key considerations:
- Supplier selection should focus on capability
- Procurement should align with energy strategy
- Long-term contracting should be explored
- Data-driven decision-making is essential.
Conclusion: The Reinvention of the Business Electricity Supplier
The UK market is undergoing structural transformation.
From:
- Delivering electricity at the lowest cost.
To:
- Delivering long-term value through energy management and Net Zero.
Many of these capabilities already exist in the market.
The pace of change is now about adoption not possibility.
The most valuable supplier is not the cheapest, but the one that delivers the best long-term outcome.
For further information on energy management systems read our guide:
Energy Management System (EMS): A Practical Guide for UK Organisations
This insight is based on TEAM Energy’s experience supporting UK organisations with carbon reporting and energy management strategies across complex operational environments.