Why UK Businesses Pay More for Energy Than the US
UK businesses are facing a growing competitiveness problem - and energy costs are at the centre of it.
Recent reporting in The Times highlighted just how stark the issue has become.
According to comments from Curry’s CEO Alex Baldock, his company is now paying around five times more for electricity than its US equivalent, Best Buy.
A dramatic shift from the 1990s, when costs were broadly the same. (The Times)
For many UK businesses, this isn’t just a headline - it’s a real and growing threat to competitiveness.
The Cost Gap: A Real Competitive Disadvantage
Energy is no longer just an overhead, it’s a strategic cost driver.
When UK firms are paying significantly more than international competitors, the impact is immediate:
Lower margins
Reduced ability to compete on price
Delayed investment decisions
Increased pressure on cash flow
And with energy prices rising again in 2026, the gap is widening at exactly the wrong time.
Why Is UK Energy So Expensive?
There’s no single cause - but several structural issues explain why UK businesses are at a disadvantage.
1. Gas-Linked Electricity Pricing
The UK electricity market still relies heavily on gas as the “price setter.”
Even when renewable generation is cheap, the final electricity price is often driven by gas-fired generation—meaning:
Electricity prices rise when gas prices rise
Businesses don’t fully benefit from low-cost renewables
2. Rising Non-Commodity Costs
A significant portion of UK business energy bills comes from non-commodity costs, including:
Network charges
Environmental and policy costs
System balancing and infrastructure costs
These charges have risen steadily over recent years and now account for a substantial share of total bills for many businesses.
3. Regulatory and System Inefficiencies
Business leaders have also pointed to inefficiencies in the UK system.
In the same The Times coverage, executives highlighted:
Complex regulation
Planning delays
The gap between generation costs and end-user prices
In some cases, electricity generated cheaply is marked up multiple times before reaching the end user, reflecting inefficiencies across the system.
4. Global Market Exposure
Unlike the US, the UK:
Imports a significant portion of its energy
Is more exposed to global gas markets
Has less access to low-cost domestic supply
This makes UK businesses more vulnerable to geopolitical shocks and price volatility.
Why This Matters More in 2026
This issue is no longer theoretical - it’s immediate and accelerating.
Business groups have warned that high energy costs are:
Holding back growth
Reducing investment
Undermining the UK’s competitiveness as a place to do business
At the same time, electrification is increasing:
EV fleets
Electric heating
Automation and AI-driven operations
Meaning energy costs will only become more important—not less.
What Can UK Businesses Actually Do?
While businesses can’t control the structure of the market, they can control how they buy and manage energy.
1. Smarter Contract Timing
In volatile markets, timing is critical.
Locking in contracts strategically, or spreading purchases, can reduce exposure to sudden price spikes.
2. Flexible Procurement Strategies
More businesses are moving away from “one fixed contract” and instead:
Stagger contracts over time
Blend fixed and flexible purchasing
Use risk-managed strategies
3. Load Shifting and Energy Optimisation
With greater renewable penetration, prices fluctuate more throughout the day.
Businesses that adjust usage:
Away from peak periods
Toward lower-cost windows
can achieve meaningful savings without switching supplier.
4. Understanding the Full Bill
Many businesses focus only on unit rates, but overlook:
Pass-through charges
Tariff structures
Hidden cost drivers
A detailed bill review can often uncover savings opportunities.
The Bottom Line
The UK is unlikely to achieve US-level energy costs in the near future.
But competitiveness isn’t just about the market, it’s about strategy.
Businesses that take a proactive approach to energy procurement are:
Reducing risk
Improving cost control
Staying competitive despite structural challenges
How We Help
At CEB Consultants, we help businesses navigate complex energy markets with tailored procurement strategies designed to reduce cost and manage risk.
If your contract is up for renewal, or you’re unsure whether you’re overpaying - we’re happy to provide a no-obligation review.