The Rising Tide of Non-Commodity Costs - What's coming next?The Rising Tide of Non-Commodity Costs - What's coming next?
For UK businesses, energy costs extend beyond the wholesale market. Today, non‑commodity charges—the policy, regulatory, and network costs layered on top of wholesale energy - already make up over 60% of your electricity bill, up from around 50% just a few years ago. And those charges are poised to rise even further.
Existing Non-Commodity Costs – Already an Unsustainable Burden
Businesses are already absorbing:
Renewables funding: Contracts for Difference (CfD), Renewable Obligations (RO), Feed‑in Tariffs (FiTs).
System and infrastructure charges: BSUoS, TNUoS, DUoS.
Capacity Market levies.
Environmental and carbon schemes: Climate Change Levy (CCL), Green Gas Levy, future Carbon Capture levies.
These costs are large, volatile, and policy‑driven. For example, BSUoS has seen sharp hikes due to balancing pressures, while CfD costs fluctuate with wholesale markets. Charging reforms like the Targeted Charging Review have also shifted structures from avoidable demand‑based costs towards fixed, higher shares that businesses can’t sidestep.
Emerging Pressures on the Horizon
On top of established costs, several new levies coming soon will further inflate bills;
Nuclear RAB Levy: Early-stage funding for projects like Sizewell C.
Network Charging Compensation / British Industry Supercharger Scheme (BIS): Exemptions for energy‑intensive industries shift more costs to others.
Hydrogen Levy: Supporting low‑carbon hydrogen, but adding another bill line.
Crucially, TNUoS charges alone are forecast to rise by over 30% which industry voices estimate could translate to around and additional 0.2–0.3 p/kWh for many business customers.
Even if wholesale prices soften, non-commodity charges will remain an escalating cost centre.
Why Businesses Must Change Energy Strategy Now
Passive reliance on grid energy leaves organisations vulnerable to a barrage of rising policy charges. Conversely, investing in on-site generation (solar, CHP, heat pumps), storage, and digital optimisation enables businesses to:
Reduce grid dependence and exposure to inflated non-commodity charges.
Use smart technology to lower costs, cut carbon, and even get paid for adjusting when you use energy
Unlock operational savings and resilience
CBS Delivers the Transition with Zero CapEx and Measurable Value
Centrica Business Solutions offers funded models paired with advanced digital tools that optimise energy use in real time. Businesses can avoid upfront cost, gain predictable savings, and shield their margins from evolving regulatory burdens.
Final Word
Non-commodity costs are the hidden tax on energy, rising relentlessly regardless of commodity trends. Businesses that take control—by generating, storing, and optimising energy on site—will be the ones to secure competitiveness, margin protection, and net-zero success.
With funded, capex-free solutions and intelligent optimisation, CBS makes that shift not just possible—but commercially compelling.
Non-Commodity Costs Appendix
Renewables (CfD, RO, FiT): Already high and volatile, set to keep growing as more projects connect.
BSUoS, DUoS, Capacity Market: Rising steadily and shifting to fixed charges that can’t be avoided.
TNUoS (Transmission): Forecast to rise by more than 30% - around +0.2–0.3p/kWh.
Nuclear RAB Levy: Due soon, funding Sizewell C during construction.
Network Charging Compensation (British Industry Supercharger): shifting more costs onto non-EII businesses.
Hydrogen Levy: supporting low-carbon hydrogen but adding a new bill line.
Carbon Capture Levy (future): Still in development, but expected later this decade.