UK Energy Outlook 2026: Key Risks and Opportunities for Businesses

As the UK energy market moves toward 2026, businesses face a landscape shaped less by dramatic price spikes and more by structural change. Regulatory reform, shifting cost components, infrastructure upgrades, and political uncertainty are redefining how energy is priced, managed, and reported.

While headline prices may appear stable, the underlying dynamics tell a more complex story. Below, we outline the key developments businesses should be watching as they plan for the next phase of the energy transition.

🔌 1. Policy & Regulatory Shifts

Ofgem Reforms & New Market Rules
By 2026, the UK will be operating under updated price controls, new market rules, and a revised levy mix. Changes to network use charges and nuclear RAB fees will alter the cost structure behind energy bills — even where headline prices remain unchanged.

Half-Hourly Settlement (MHHS) Rollout
The Market-wide Half-Hourly Settlement programme continues into 2026, meaning electricity billing will increasingly reflect actual half-hourly usage rather than estimates. This creates opportunities for flexibility and cost optimisation, but also requires investment in metering, data, and energy management systems.

Price Cap Adjustments
Ofgem’s quarterly energy price cap updates may affect default tariffs and standing charges, particularly in early 2026, with knock-on impacts for both consumers and businesses.

💷 2. Price Dynamics & Cost Structures

Wholesale vs Non-Commodity Costs
While wholesale gas and power prices may be calmer than during recent crises, non-commodity costs — network charges, levies, and standing charges — are expected to account for a larger share of energy bills, especially for business users.

Contract Renewal Risk
Organisations coming out of multi-year contracts in 2025–26 may face renewals priced at a higher baseline, complicating budgeting and long-term cost planning.

Interest Rate Environment
Expected interest rate cuts in 2026 could influence energy investment decisions, financing costs, and infrastructure funding, with mixed implications across the sector.

🌬️ 3. Infrastructure & Transition Risks

Grid & Transmission Upgrades
Major investments, including large-scale transmission upgrades, are underway to support renewable generation and grid resilience. However, delays, cost overruns, and capacity constraints remain material risks.

Variable Renewable Output
Rising offshore wind penetration brings record generation — but also highlights challenges around intermittency, wind lulls, and system balancing as variable renewables take a greater share of supply.

🔋 4. Emerging Sector Dynamics

Hydrogen & New Technologies
The government’s evolving hydrogen strategy is under close scrutiny. A narrow or uncertain approach risks slowing deployment and deterring investment at a critical stage of development.

Energy Efficiency & Flexibility
Regulatory incentives for efficiency, demand flexibility, and smarter tariffs — particularly for SMEs — are likely to increase. Businesses adopting smart meters, automated energy management, and demand-response technologies can gain a competitive advantage.

📊 5. Strategic Business Risks

Data & Reporting Expectations
There is growing pressure on organisations to provide granular energy data and robust reporting to meet compliance, investor, and ESG requirements. Those without the right systems may struggle to evidence progress.

Talent & Skills Migration
Global competition for renewable and energy specialists — particularly from markets offering higher wages — raises the risk of skills shortages in the UK energy sector.

📝 6. Political & Policy Uncertainty

Net Zero Policy Debate
Energy and net-zero policy remain politically sensitive, with differing party approaches creating uncertainty for long-term investment and strategic planning.

Regional Policy Risks
Debates around devolved energy policy, including in Scotland, highlight how regional politics can influence infrastructure narratives and investor confidence.

🤔 Summary: Key Watch-Outs for 2026

• Prices & Contracts: Rising non-commodity charges and higher renewal baselines
• Market Reform: MHHS impacts and price cap changes
• Infrastructure: Grid upgrade costs, capacity, and delivery timelines
• Energy Transition: Hydrogen policy clarity and renewable variability
• Compliance & Data: Increasing reporting and ESG expectations
• People & Investment: Skills competition and policy-driven confidence

At GLEG, we help organisations navigate these changes with clarity — turning regulatory complexity and market uncertainty into informed, strategic decisions. For more information contact us at hello@gleg.co.uk.