By Tom McGlynn
Budget 2026: what does it mean for your business energy bills?
What changes, who could benefit and when it starts. A practical guide to the energy announcements and what to check before your next renewal.
If you manufacture products, start with BICS.
There is useful news for business energy users in the 28 October Budget. The important questions are whether it applies to your supply, when it starts and what you can do about it.
BICS is the first thing to check.
The Budget confirms BICS support starting in April 2027, including a back payment for 2026/27. It describes a 20–25% electricity discount for eligible manufacturers. That is a scheme-level estimate, not a guaranteed saving for every site. Read the Budget announcement.
The scheme covers Renewables Obligation, Feed-in Tariff and Capacity Market costs on qualifying electricity. Eligibility depends on your company, manufacturing sector, products and electricity use. It is worth checking even if you would not describe your business as a large factory. See the scheme overview.
The existing applicant guidance schedules RO and FiT exemptions from April 2027, then Capacity Market relief from October 2027. The newly announced back payment is separate; we have not added an assumed amount to our saving examples. Check the delivery guidance.
Start with your company number, what you manufacture and your recent electricity bills. Our BICS checker and worked examples help you work through the initial questions before discussing an application.
Some costs change later.
The planned Gas Shipper Obligation will no longer be introduced. That avoids a proposed additional gas cost; it does not remove an existing line from your bill. A new Cost Control Framework is planned for the 2027 spending review. Until then, new policy costs are restricted, with exceptions for measures that lower bills or are essential for security of supply. Read HM Treasury’s explanation.
From 1 April 2028, electricity’s main Climate Change Levy rate will be frozen at its 2027/28 level. Gas CCL will still rise with RPI. A freeze is not an exemption, and this is not a change to today’s CCL charge. Read the tax timetable.
The Budget also repeats the previously announced end of Carbon Price Support in April 2028. This is a power-generation carbon charge, so it should not be described as an automatic, fixed reduction in every customer’s unit rate. See the Budget detail.
Ask how the supplier handles policy and tax changes during the contract. A useful comparison shows what is fixed, what can change and how any eligible relief will be passed through.
A proposal to reduce exposure to gas prices.
The government has opened a consultation on wholesale Contracts for Difference for existing low-carbon electricity generators. It covers eligibility, auctions, commercial arrangements and possible market effects. Read the consultation.
This is still a proposal. Our view is to keep it on the watch list, rather than build an assumed saving into a renewal quote today.
Household headlines need context.
The gas standing-charge proposal concerns domestic supplies in Great Britain. The government wants those costs moved into unit rates, aiming for the end of 2027 or as soon as possible afterwards. Moving a charge is not the same as removing the underlying cost. Read the household announcement; see the delivery target.
It does not announce the end of standing charges on ordinary commercial gas contracts.
The temporary 0% VAT rate for qualifying domestic electricity is also being extended to 1 July 2027. Do not assume this changes the VAT on every business electricity account. Read the electricity VAT announcement.
If you manage residential property or a mixed-use supply, the useful question is what treatment applies to that particular account. We can help you check what the supplier has recorded.
Should you wait before renewing?
A Budget headline is not enough to make that decision. We would look at your contract end date, the offers actually available and the risks you are comfortable taking.
Nobody can know whether a better price will be available next week or next month. Fixing gives you certainty over the charges covered by the contract; waiting leaves you exposed to prices moving in either direction.
Keep the two conversations separate: check support you may qualify for, and compare the contracts available for your renewal. Ask each supplier how the relevant relief or future charge change would be handled.
Our Market Desk shows wholesale price movements for different delivery periods. Use it as context alongside supplier quotes, rather than treating a wholesale benchmark as the price you will pay.
Let’s put your bill beside the headlines.
Tell us what your business does, when your contract ends and what you are paying. We can help you identify the relevant changes and compare your next steps.
