UK businesses are being urged to prepare for a significant rise in electricity costs from today, 1 April 2026, with many medium-sized energy users facing energy bill increases of around £75,000.
Energy company, Wattstor, is warning that large increases to the Transmission Network Use of System (TNUoS) Demand Residual (TDR) Charge will add to the overall cost of delivered electricity, already compounded by the current volatility in world gas prices and the knock-on effect on UK wholesale electricity costs.
The TDR is a significant part of a range of grid charges that help fund critical infrastructure investments needed to support the energy transition. The next “price control period” starts on 1 April 2026 and runs for five years until March 2031.
The fixed TDR charges for the first year to March 2027 are increasing for some businesses by over 65% compared to the previous year. Further increases averaging some 15% per annum are forecast for each of the subsequent four years out to 2030/31.
What many businesses don’t realise is that the charging band they’re in today is now locked in for the full five-year period until April 2031. Furthermore, that lock was set some two years ago based on the grid supply capacity at the business premises, as of January 2024 – effectively a seven-year period. The only exception to this banding lock is if a business can make an exceptional adjustment and give up more than 50% of its grid capacity.
Wattstor is arguing that the locking of a TDR charge band for such an extended period does not incentivise or recognise the huge system benefits of a business installing renewable generation with energy storage at the consumption end of our transmission and distribution system.
As Kevin Ball, Chief Commercial Officer at Wattstor, says, “TNUoS related costs are necessary to pay for the infrastructure upgrades required to facilitate the clean power transition. These significant increases come at a time when many organisations are already under pressure from high energy costs and market uncertainty and the UK continues to face some of the highest industrial electricity costs in Europe.
“However, the current regulations mean that the UK is potentially over-investing in new network capability while existing capacity is underutilised, pushing up standing charges higher than they need to be. Installing on-site renewable energy generation with energy storage means that sought-after grid capacity could be released for other businesses struggling to secure new or larger supply connections in a timely manner.
“While organisations have focused on reducing consumption and improving efficiency in response to high energy prices, this will not mitigate the increasing fixed cost of the grid supply. Businesses now need to assess whether they can reduce their reliance on grid supply over the medium term and develop a strategy that can minimise their total electricity cost.”
Wattstor is urging organisations to act now and consider switching to local renewable energy sources and on-site storage as a practical way to smooth their energy demand, reduce their exposure to rising grid charges, and take greater control of their energy costs.
This could include facilities such as manufacturing plants, logistics hubs, and venues like stadiums or event spaces, which are particularly exposed to all the standing grid charges due to their irregular demand patterns.
Kevin Ball continues, “The good news is that there is something affected businesses can do to reduce their exposure to this increasing cost over the medium term. By deploying on-site generation and energy storage over the next two years, some companies can move to operate their businesses with a lower contracted supply capacity. If the current rules cannot be loosened in the meantime, then businesses need to ensure that they have their on-site generation system, and an optimal grid capacity, in place by the end of 2028. Otherwise their TDR charge band will be locked in for a further five years.”
Wattstor is encouraging organisations to review their current capacity commitments and assess their future exposure. It can analyse site consumption patterns, and the extent to which grid supply can be supplemented by on-site generation and storage to assess the full range of cost-saving opportunities, including the standing charges.
