Non-Domestic Energy: Future Prices, Flexibility & Innovation

Hello, Champions of Net Zero!

The landscape of energy markets is shifting at an unprecedented pace, driven by fluctuating prices, evolving regulations, an urgent push for sustainability, and remarkable advancements in technology. In recent years, organisations have been grappling with soaring energy costs, which have directly impacted their operations, profitability, and overall financial sustainability. The need for a transformation in how we consume and manage energy has never been more critical.

As we stand at the crossroads of this energy revolution, the recent Review of Electricity Market Arrangements (REMA) is heralding significant reforms that promise to pave the way for a cleaner, more affordable, and secure electrical power system. The energy market is evolving into a more flexible and dynamic entity, reshaping the very fabric of how organisations buy, manage, and consume energy. The deployment of smart meters and the ongoing shift towards digitalisation are fuelling innovation, enabling retailers to offer a broader array of flexible, data-driven products and services tailored specifically to consumer needs.

In this article, we delve into key developments that are poised to revolutionise the way non-domestic customers engage with the energy markets in the coming years. From innovative tariff structures to community-driven energy solutions, the future is bright for those willing to adapt to this new energy paradigm.

Time-of-Use Tariffs

Time-of-use (TOU) tariffs represent a transformative approach to energy pricing, offering varying electricity costs depending on the time of day. This structure encourages organisations to harness energy during off-peak hours when prices dip, ultimately leading to significant savings. Traditional TOU tariffs, such as Economy 7 and Economy 10, have long offered lower electricity rates during night-time hours. However, the landscape is shifting, and newer, more sophisticated TOU tariffs are now emerging, adjusting prices in real time in response to market conditions. For instance, Octopus Energy’s Shape Shifters-Agile tariff provides half-hourly pricing that is directly linked to wholesale rates, empowering non-domestic consumers to optimise their energy usage and cut costs effectively.

Type-of-Use Tariffs

In addition to time-based pricing, type-of-use tariffs offer a pricing structure that varies based on how energy is utilised, rather than merely when it is consumed. These tariffs are specifically designed for certain technologies and appliances, including electric vehicle (EV) chargers, heat pumps, and battery storage systems. For example, OVO Energy’s “Drive Anytime” tariff offers a discounted rate for domestic customers charging their electric vehicles with smart chargers. While similar options are yet to become mainstream for non-domestic consumers, they hold the potential to play a pivotal role in reducing costs and facilitating the transition towards smart, low-carbon energy solutions.

Time-Matched Tariffs

Time-matched tariffs take the concept of energy pricing a step further by ensuring that the renewable energy an organisation procures aligns perfectly with their actual electricity consumption during each half-hour period. This meticulous half-hourly time matching is vital for genuinely reducing the carbon footprint across the energy system, bolstering grid stability, and maximising the benefits of renewable energy when it is available. Not only does this approach reduce costs across the energy landscape, but it also guarantees that organisations can confidently assert their energy is genuinely green, affording them full transparency and control over their sustainability commitments.

Power Purchase Agreements (PPAs)

Power Purchase Agreements (PPAs) have gained traction among public sector organisations and large enterprises seeking long-term price stability alongside a commitment to renewable energy sourcing. These agreements enable businesses to procure electricity directly from renewable generators, locking in competitive rates for periods extending up to 25 years. While long-term contracts dominate the landscape, shorter-term PPAs (ranging from 2 to 5 years) are also becoming available for operational assets, granting organisations increased flexibility and adaptability in their energy procurement strategies.

Local Energy Clubs

Local community energy clubs are emerging as a powerful solution, bringing together communities to invest in local renewable power generation. These clubs facilitate access to cheaper, green energy from nearby sources for both domestic and non-domestic customers within the local area. Participants in these initiatives contribute to local environmental objectives, promoting energy independence and reducing reliance on centralised energy systems. For inspiring case studies of local energy clubs, visit energylocal.org.uk.

Smart Electricity Exports

Onsite renewable generation often produces surplus energy, the market value of which can vary significantly based on the selling method employed. With an increasing interest in self-generated electricity, organisations equipped with solar panels or other renewable assets can now engage in lucrative energy export schemes. Initiatives such as Open Power enable businesses to secure better returns on their surplus energy exports, turning excess energy into a valuable asset.

Energy Market Intermediaries

As the energy market grows in complexity, many non-domestic customers are turning to market intermediaries to help navigate their energy procurement decisions. These intermediaries provide essential services, including market intelligence, price comparisons, collective and auto-switching options, contract negotiation, and risk management. By leveraging these services, businesses can secure the best deals while aligning their procurement strategies with sustainability objectives. As the role of energy market intermediaries becomes increasingly prominent, it is encouraging to note that Ofgem, the UK’s energy regulator, is considering regulatory oversight for these entities, ensuring a fair and transparent market.

Flexible Power Schemes

Demand response and grid flexibility services, once exclusive to large industrial users, are now becoming accessible to small and medium enterprises (SMEs) and public sector sites with flexible energy assets. Companies like KiWi Power are leading the charge in aggregating energy flexibility, allowing smaller organisations to participate in flexible power schemes and reap financial rewards. These programmes enable organisations to generate additional revenue by adjusting their energy consumption during peak grid demand periods and managing on-site power generation with assets like batteries to support grid needs.

Conclusion

The energy markets are undergoing a profound transformation, driven by digitalisation, flexibility, and an unwavering commitment to sustainability. Innovations such as advanced tariff structures, community energy clubs, Power Purchase Agreements, and smart electricity exports are reshaping the engagement of non-domestic customers with energy. As regulatory reforms like REMA continue to unfold, organisations that proactively embrace these changes—leveraging new procurement models, engaging market intermediaries, and participating in demand flexibility programmes—will be best positioned to manage costs, mitigate risks, and achieve their sustainability goals.

To remain competitive in this rapidly evolving landscape, organisations must seize these opportunities, embrace innovation, and actively participate in shaping the future of the energy market. The time for action is now—are you ready to join the revolution?

For further information, please visit Energy Systems Catapult.

This article originally appeared in the March 2025 issue of Energy Manager magazine. Subscribe here.