The UK's energy market is undergoing a seismic shift, and Small and Medium Enterprises (SMEs) are in the eye of the storm. With the government's 2050 deadline for net zero carbon emissions fast approaching, businesses are under increasing pressure to adapt to a rapidly changing energy landscape.

Regulatory Pressures

SMEs are increasingly feeling the weight of regulatory demands. The Streamlined Energy and Carbon Reporting (SECR) initiative mandates large companies to report their carbon emissions, indirectly enforcing strict net-zero targets upon SMEs in their supply chains. Moreover, securing government contracts worth over £5 million now requires a robust carbon reduction plan, adding another layer of compliance for SMEs.

The Harsh Reality of Green Tariffs

A critical aspect of this transition is the adoption of green tariffs. However, many of these tariffs are not as green as they claim. Ofgem's scrutiny reveals that most are backed by REGO certificates, not directly by renewable generation PPAs with solar and wind farms. This misleading scenario complicates SMEs' efforts to genuinely contribute to the UK's net-zero goal.

The Disproportionate Cost Burden on SMEs

For SMEs, the challenge is exacerbated by the disproportionate cost of electricity. Alarmingly, SME electricity tariffs could be up to 26% more expensive than those for larger organisations (Gov.UK, 2025). This steep pricing, a result of energy suppliers perceiving SMEs as high-risk, places an undue financial burden on smaller businesses.

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Volatility and Unpredictable Expenses

The energy market has experienced unprecedented volatility in recent years, with electricity prices going negative for 67 hours in the first half of 2024 (Utility Week, 2024). Although the electricity price had dropped significantly from record highs in 2022, the wholesale electricity price remains higher than the pre-COVID level (Trading Economics, 2025). 

Market volatility in the energy sector presents a complex challenge for SMEs. Whilst these businesses commonly secure their energy prices through fixed tariffs, the indirect consequences of market fluctuations still ripple through to impact their operations. Energy suppliers, in anticipation of potential volatility, may adjust their pricing strategies accordingly. To mitigate their exposure to rapid market changes, suppliers often incorporate a risk premium into the fixed tariffs. This premium is essentially an insurance against the unpredictability of energy prices.

An Overlooked Aspect of Electricity Bills

Compounding the issue is that non-commodity service charges, including network and system charges, constitute a staggering as much as 60% of the electricity bill. These charges are subject to peak-time surges, such as the Distribution Use of System (DuoS) charges, which can be over 100 times higher during peak hours (4-7 pm) compared to night-time rates.

The Smarter Way Forward: Shift, Store, and Save

Installing energy storage and optimising with AI technology allows you to shift usage away from peak times, reducing both cost and carbon in one move. Our battery tariff offers guaranteed savings by providing energy storage with no upfront cost, and rates up to 3p/kWh cheaper than the best fixed tariffs on the market. By making smarter use of off-peak electricity, you gain budget certainty, lower emissions, and better day-to-day performance across your energy assets.

Conclusion

The combination of misleading green tariffs, disproportionate costs, market volatility, and regulatory pressures demands immediate and strategic action. Innovations in energy technology and management are more than just a necessity – Book a free consultation call to transform your energy landscape!

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