How small businesses can tackle rising energy costs in 2026

Energy costs remain a significant pressure for UK SMEs in 2026, even though the market looks very different from the extreme volatility seen a few years ago.

The latest British Chambers of Commerce survey found that 53% of businesses still cite utility costs as a pressure on prices. Energy-intensive sectors feel it particularly strongly, alongside continued pressure from wages, fuel and other operating costs. British Chambers of Commerce

For small businesses, the priority is increasingly to control what they can: how much energy they use, what contract they are on and how quickly they act when costs become difficult to manage.

Are business energy bills covered by the price cap?

In most cases, no. The household energy price cap does not protect businesses with non-domestic energy contracts.

Business energy prices depend on the supplier, contract, usage and when the agreement was signed. Ofgem says wholesale energy can account for around 40% of a typical business electricity bill and 60% of a gas bill, although this varies considerably. Ofgem

Many businesses are on fixed-term contracts, so changes in wholesale prices may not affect them immediately. Ofgem reported earlier this year that business contract lengths were increasingly returning to three to five years. Ofgem

That makes the point at which a contract comes up for renewal particularly important.

1. Review your energy contract before it expires

Do not wait until the renewal date to understand your options.

Check:

• when your existing contract ends;
• your current unit rates and standing charges;
• any termination or notice requirements;
• whether the renewal offer is fixed or variable; and
• what competing suppliers are offering.

Switching supplier can be worthwhile. Ofgem's latest business research found that 29% of businesses had switched supplier during the previous year, with three quarters of those saying the process was easy. Ofgem

If you use an energy broker, make sure you understand how they are being paid and what fees or commissions are included.

2. Reduce unnecessary energy use

The cheapest unit of energy is usually the one you do not use.

Small changes can add up, particularly for businesses operating from larger premises.

That might include:

• switching lighting to LEDs;
• adjusting heating and cooling times;
• turning equipment off rather than leaving it on standby;
• maintaining boilers, refrigeration and machinery properly;
• using timers or occupancy sensors; and
• identifying equipment using unusually high amounts of power.

For manufacturers, hospitality businesses and other heavy users, it may also be worth measuring energy consumption by process or piece of equipment rather than simply looking at the total bill.

3. Check bills and meter readings

Billing errors and estimated readings can make already high costs harder to understand.

Check that meter readings match the figures being used by your supplier and compare actual consumption with previous months and years.

Unexpected increases can sometimes identify a practical problem — faulty equipment, heating running outside business hours or a change in operating patterns — rather than simply a higher tariff.

Better energy data also makes it easier to judge whether efficiency investments are actually delivering savings.

4. Consider whether energy-efficient investment will pay back

Replacing older equipment, improving insulation, installing better controls or generating some electricity on site can reduce long-term costs.

But the calculation should be commercial.

Ask:

How much will it cost, how much energy will it realistically save and how long will it take to recover the investment?

Grants and regional schemes are available from time to time, while some suppliers also offer support for energy-saving improvements. Eligibility varies, so businesses should check the current scheme rather than assuming funding is available. Ofgem specifically recommends checking supplier schemes, grants and other finance support when looking for help with energy costs. Ofgem

5. Speak to your supplier early if you are struggling

Do not wait until bills have become unmanageable.

Ofgem advises businesses experiencing difficulty to contact their supplier as soon as possible.

Depending on the circumstances, suppliers may be able to offer:

• a revised payment plan;
• more time to pay;
• payment reductions or breaks; or
• access to hardship funds. Ofgem

Acting early gives both sides more options and can help avoid additional debt or disruption to the business.

What do energy costs mean for the value of a business?

High energy costs do not automatically make a business less valuable, but buyers will want to understand how exposed it is.

They may look at:

• energy costs as a percentage of turnover;
• whether margins have been maintained;
• the remaining term of energy contracts;
• efficiency of equipment and premises;
• whether price increases have been passed to customers; and
• opportunities for a new owner to reduce costs.

A business that can demonstrate good control of energy consumption and margins is easier for a buyer to assess than one where costs fluctuate without a clear explanation.

Thinking about selling your business?

If you are considering selling within the next few years, understanding your operating costs is an important part of understanding what the business may be worth.

At Intelligent, we can provide a free, confidential business valuation, alongside practical information about current buyer demand and the factors likely to influence value.

No jargon. No pressure to sell. Just clear, useful advice.