UK Inflation Hits 2.9%: What Rising Energy Means for Business Electricity Costs
UK inflation has reached 2.9%, but what does the rising inflation mean for business electricity costs. With autumn and winter approaching, businesses are once again facing uncertainty around energy costs and looking for practical ways to reduce their electricity expenditure and become less reliant on the grid.
The rise in inflation highlights the continued cost pressures businesses are facing, making a cheaper and more stable energy future an important consideration. In 2022, the energy price cap increased by 54%, with Ofgem later announcing a further 80% increase scheduled for October 2022. While commercial energy contracts are different from the domestic price cap, the volatility of the energy market demonstrated how quickly costs can change.
We’re here to help you as a business, as we understand the changing energy prices, and how they can affect you. Through this blog we guide you through a journey from problem to solution to reduce costs and improve energy independence on the grid.
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WHAT DOES THE IMPACT OF INFLATION ON BUSINESSES MEAN?
Rising inflation means more pressure on UK commercial businesses, particularly those already facing higher energy, labour, material, and borrowing costs. Unlike domestic customers, businesses are not protected by Ofgem’s household energy price cap, leaving commercial premises more exposed to fluctuations in electricity and gas prices.
As operating costs rise, businesses face a difficult choice: absorb higher costs and accept lower profit margins or increase prices and potentially affect customer demand. Inflation can also delay recruitment and capital investment as businesses protect cash flow and become more cautious about spending.
For energy-intensive businesses, this makes energy efficiency, commercial solar PV and battery energy storage increasingly relevant. Generating electricity on-site through solar PV can reduce reliance on grid electricity, while battery storage can help businesses increase solar self-consumption and manage when they use electricity.
Ultimately, for commercial businesses facing sustained cost pressures, reducing energy consumption and gaining greater control over energy costs can be an important part of protecting margins and improving long-term resilience.
HOW COMMERCIAL SOLAR CAN HELP REDUCE BUSINESS ENERGY COSTS
Commercial solar can help businesses reduce energy costs by generating electricity on-site during peak daylight hours, when many commercial properties have their highest electricity demand. By using this solar power directly, businesses can reduce the amount of electricity they need to purchase from the grid, lowering their variable energy costs and exposure to rising electricity prices. Any surplus electricity may also be exported to the grid, where eligible businesses can receive payment for excess generation.
Adding commercial battery storage systems can increase these savings further by storing surplus solar energy for use when solar generation is low or electricity prices are higher, improving overall energy self-consumption. While solar does not remove fixed charges such as standing charges or network costs, a well-designed solar PV and battery energy storage system can significantly reduce purchased electricity and provide greater long-term certainty over energy costs.
With commercial solar panels typically designed to operate for around 25 years, the potential combination of energy savings, export income and reduced exposure to future electricity price increases can make solar PV an attractive long-term investment for UK businesses.
FREQUENTLY ASKED QUESTIONS ABOUT BUSINESS ENERGY COSTS
What Is the UK Inflation Rate in July 2026?
The UK inflation rate, measured by the Consumer Prices Index (CPI), was 2.9% in July 2026, rising from 2.6% in June. The rise in inflation was largely driven by higher gas and electricity prices following a 13% increase in the Ofgem energy price cap at the start of July, with housing and household services also contributing to upward pressure. For UK businesses, higher energy costs can increase operating expenses and put further pressure on profit margins.
Does the Energy Price Cap Apply to Businesses?
No, the Ofgem Energy Price Cap does not apply to businesses in the UK. The price cap is designed for eligible domestic household customers on standard or default tariffs and limits the unit rates and standing charges energy suppliers can charge. Commercial energy customers instead agree business energy contracts directly with suppliers, with prices influenced by factors such as energy consumption, contract length, usage patterns and wholesale market conditions.
This means businesses do not have the same universal protection against rising energy prices as households and can be more exposed to changes in the wholesale energy market when negotiating new contracts or renewing existing ones. Although Ofgem regulates the non-domestic energy market and provides protections around areas such as transparency and broker fees, there is currently no equivalent universal price cap for commercial energy customers. For businesses looking to reduce their exposure to volatile electricity prices, measures such as energy efficiency, commercial solar PV and battery energy storage can help reduce reliance on grid electricity.
How Can Businesses Reduce Their Energy Costs?
Businesses can reduce their energy costs by combining simple energy-saving measures with longer-term investments in efficiency and renewable energy. Start with an energy audit to identify where electricity and heating are used and where energy is wasted, then take low-cost steps such as switching off unused lights and equipment, avoiding standby power, adjusting thermostats, and preventing draughts.
Upgrading to commercial LED lighting, installing smart controls such as motion sensors and programmable thermostats, improving insulation and regularly maintaining heating, cooling and refrigeration equipment can further reduce energy consumption. Businesses should also review their commercial energy tariff regularly to make sure they are getting a competitive rate.
For businesses looking to reduce their reliance on grid electricity over the longer term, commercial solar PV and battery energy storage can generate and store electricity on-site, helping to lower purchased electricity and improve control over energy costs. By combining energy efficiency with renewable generation, business electricity costs can be reduced, and become more resilient to future energy price increases.
How Can Businesses Reduce Their Reliance on the Grid?
Businesses can reduce their reliance on the national grid by generating, storing and managing their own energy more efficiently. Installing commercial solar PV or other on-site renewable generation allows businesses to produce electricity at the point of use, reducing the amount they need to purchase from the grid, while battery energy storage systems (BESS) can store surplus solar power for use when renewable generation is lower or electricity prices are higher.
Battery storage can also help reduce spikes in electricity demand and potentially lower demand-related network costs. Businesses can further reduce grid dependence by using smart energy management systems, time-of-use tariffs and demand-response technology to change flexible loads such as EV charging, heating and cooling to cheaper periods or reduce consumption during times of high grid demand.
For businesses unable to install renewable generation on-site, Power Purchase Agreements (PPAs) can provide access to renewable electricity from dedicated generation projects. Combined with energy-efficiency measures such as LED lighting, efficient HVAC systems, improved insulation and automated energy monitoring, these measures can help businesses reduce grid consumption, lower energy costs and improve long-term energy resilience.
ARE YOU GOING TO BE PREPARED FOR THE NEXT INFLATION INCREASE?
As inflation continues to put pressure on business electricity costs, will you be prepared for the next increase? If you have questions about the 2.9% UK inflation rate and what rising costs could mean for your business, get in touch with our renewable energy experts through our project enquiry page: https://excelenergy.co.uk/project-enquiry/
We can help you understand the impact of inflation on businesses such as rising energy costs and explore the solutions available to improve energy efficiency and reduce your reliance on the grid. From commercial solar PV and battery energy storage to a commercial EV charger installation, there is a range of solutions that can help businesses manage electricity demand, reduce energy costs and improve long-term energy resilience.