As 2025 draws to a close, it’s hard to ignore just how much the energy landscape has shifted. We’ve seen policymakers rule out zonal pricing, bills swing up and down, major decisions on nuclear investment, Great British Energy established, and long-awaited network connections reforms. But the real question is: what comes next? Looking ahead to 2026, here’s what we think will shape the upcoming year in the energy market.
1) Non-commodity costs will reach 60% of business electricity bills forcing the Government to intervene… again
By 2026, our forecasts show, non-commodity charges will make up nearly 60% of a typical business electricity bill. This is being driven by rising transmission costs, new bill components such as the Nuclear Regulated Asset Base, and the widening of exemption schemes for energy-intensive users. Around 500 businesses that benefit from these schemes will see some relief, but for the majority outside these schemes, costs will continue to climb.
Even with softer gas prices, overall electricity bills are set to rise, and this imbalance will increase pressure on Government to act again. Expect further intervention beyond measures announced like the British Industrial Competitiveness Scheme (expected in 2027) as policymakers respond to mounting pushback on non-energy charges particularly for sectors and organisations not already covered by support schemes.
If you’re wondering what this means for your bottom line, our latest release on grid and policy fees explores the impact on large businesses and includes a preview of data from our Business Energy Forecast.
2) CfD AR7 will fall short of Clean Power 2030 targets
Should Contract for Difference (CfD) Allocation Round 7 (AR7) clear at each technologies Administered Strike Prices, this could see only ~7.5GW of new build renewables securing contracts. The figure matters because the CfD is the Government’s main tool for scaling up low carbon generation and 7.5GW would leave GB short of its Clean Power 2030 targets.
Competition levels and actual clearing prices could shift this total, particularly for offshore wind, where the Government retains the ability to adjust the budget. AR7 might also mark a first: repowered onshore wind sites winning contracts. However, engagement here is likely to be limited due to a relatively small pipeline size and competitive pressures.
With AR8 and AR9 likely to be the final CfD Allocation Rounds with delivery years prior to 2030, the pressure is on to keep the scheme aligned with capacity targets, and to set parameters that attract sufficient participation.
For those tracking CfD developments, our exclusive customer report on the AR7a Budget, part of our CfD Support Service, digs into the numbers and what they mean for future rounds. Non-customers can find out more on our service here.
3) Behind-the-meter solar and storage will surge past 1GW
Businesses are feeling the squeeze from high electricity costs, combined with growing third-party and network charges. In response, 2026 will see sustained growth in businesses deploying onsite solar generation and storage assets, with more than 1GW of new behind-the-meter solar and storage capacity expected, as energy users look for ways to cut costs, and sidestep connection delays.
If you’re considering on-site generation, our blog on the: Top 10 Reasons Your Business Should Consider On-Site Solar Generation & Storage, offers practical insights.
4) Connections reform will substantially increase the capacity of renewables coming onto the grid
With 132GW of generation and storage assets prioritised for connection to the grid by 2030, GB needs to average 26.4GW of new connections a year over the next five years. That’s a huge leap from the 8GW annual average before the reforms came into effect.
The switch from “first come, first served” to “First Ready, First Needed, First Connected” could be a game-changer. If developers and networks move quickly and meet readiness criteria, we expect 2026 to show the first signs of acceleration. GW connection rates should climb into double digits, signalling that ambition is finally turning into delivery.
For those who want to dive deeper, we’ve unpacked the implications of these reforms in our latest Regulatory Intelligence analysis. If you’re not a Regulatory Intelligence customer find out more about the service here.
5) The electricity supply market will continue to fragment
Persistent high energy costs driven by network investments are pushing more customers to seek alternative supply arrangements and greater control over their consumption. In turn, suppliers of all sizes, including new entrants, will continue to take advantage of rule changes such as market-wide half hourly settlement (MHHS) and the growing demand for better green propositions such as matched Renewable Energy Guarantees of Origin and Power Purchase Agreements to broaden the range of tariff models available to both businesses and households.
Listen to our podcast with Secure Meters Group CEO, Suket Singal, to find out more on how smart meters could support MHHS transition and deliver consumer value: Podcast - Being Smarter With Metering.
6) TNUoS reform will take centre stage as network charges enter a new era
With the aim of sending more effective locational signals to drive investment, DESNZ and Ofgem’s review of Transmission Network Use of System (TNUoS) and connections charges will lay out plans for future reform. Full implementation is expected to be delivered by 2029 at the latest but TNUoS will remain at the forefront of conversations from now until then.
Maintaining a balance between providing locational granularity to steer investment, while also offering generators much needed predictability in charges, is of paramount importance. Both are critical to unlocking new capacity and maintaining investor confidence
Our updated forecasts, including TNUoS and Distribution Use of System charges, are available through our Network Charging Forecast Service. Fill in this form to get access to our webinar and discover how our Network Charging Forecast Service can support your planning.
7) Energy affordability for households will remain a key concern. With the Government forced to intervene… again
While the Autumn Budget and Ofgem’s Final Determinations on network costs will soften the previously expected rise in household bills from April 2026, the medium-term outlook remains challenging. Costs will still feel high for many, and the Government is therefore likely to implement further measures in an attempt to hit its bill reduction targets.
Keep up-to-date with our price cap predictions here or find out how you can get access to our predictions out to 2030: Default Tariff Cap Predictor
8) Grid bottlenecks will drive regional divide in battery market revenues
2025 saw the most wind curtailment in GB history. This happens when wind farms are told to reduce or stop generating electricity because the grid cannot move electricity from where it is produced to where it would be used. Curtailment is widely unpopular but is inevitable at scale until the network is expanded to match the growing generation capacity.
In the meantime, grid constraints have created a regional variation in battery revenues between England and Scotland. With ~1GW of new wind generation expected to connect in Scotland and no major transmission works set to complete in 2026, we expect differences between regional markets to only grow.
Our blog explores the dynamics of battery storage revenue: Riding the Battery Storage Revenue Rollercoaster and includes data from our comprehensive BESS Analytics Service part of our Flexibility package.
9) Balancing Markets reform will accelerate and diversify
There will be a jam-packed agenda of potential changes to be implemented, proposed, and ironed out across the balancing market. The new Slow Reserve service is set to go live by the end of March, while NESO explores a Demand for Constraints service under its Constraints Collaboration Project, future data centres could play a big role here.
Beyond this, demand-side flexibility will continue to expand, and NESO is pushing ahead with plans for locational balancing services, moving away from the current national approach.
If you’d like to explore flexibility and the developments on the horizon in more depth, our Flexibility Academy training course offers further insights.
10) The government will start to implement Reformed National Pricing, but progress will stay slow
The Government will begin the next phase its Reformed National Pricing (RNP) plan, but don’t expect rapid progress. Four years after the Review of Electricity Market Arrangements (REMA) launched, major change remains elusive. The inherent complexity of market redesign extended TNUoS reform timelines, ongoing NESO and Ofgem consultations, and political uncertainty all point to the sluggish rollout continuing.
Some operational tweaks, such as Balancing Mechanism reforms and constraint management measures, may arrive sooner. But full implementation of RNP is still years away, leaving investors and developers awaiting clarity.
Explore what Reformed National Pricing could mean across the GB market, in our Energy Spectrum perspective: REMA commits to Reformed National Pricing, but not the status quo. If you’re not a subscriber, access the full analysis by applying for a free trial of Industry Essentials .
