Retailers are facing a £440m increase in electricity costs this year, even though their energy consumption is expected to remain virtually unchanged.

For small retailers and independent businesses already dealing with rising operating costs, this could put even more pressure on already tight profit margins.

The figures come from a new report by the British Retail Consortium (BRC), the main trade association for UK retail businesses.

Retail is one of the UK’s most electricity-intensive industries. Following significant investment in decarbonisation, around 90% of the sector’s energy use now comes from electricity. This means changes to electricity prices and charges can have a big impact on retailers’ operating costs.

The BRC warns rising electricity bills could eventually feed through into higher prices in shops, adding further pressure to the cost of living for millions of families.

But while you can’t control wholesale energy prices or government policy, there are practical steps you can take to reduce your energy consumption, manage your bills and protect your bottom line.

What does the industry report show?

The BRC report highlights the scale of the challenge facing retailers, with electricity costs expected to rise sharply in 2026.

According to the report, retailers’ electricity costs are forecast to increase from £2.72bn in 2025 to £3.16bn in 2026. That’s a rise of £440 million, or around 16%, in just one year.

Much of this increase is being driven by rising Non-Commodity Charges (NCCs). These are the costs added to electricity bills to cover things such as government policy schemes and the operation, maintenance and development of the electricity network, rather than the wholesale cost of energy itself.

These charges now typically account for around two-thirds of retailers’ electricity bills, according to the BRC. With network costs and government levies continuing to put pressure on bills, businesses could find themselves paying more for the same amount of electricity.

For smaller retailers, this presents a particular challenge. You may already be doing everything you can to manage your energy use, but your bills could still rise even if your consumption stays the same.

What is the BRC calling for?

The BRC is urging the government to take action to ease the pressure on electricity-intensive retailers. Its recommendations include:

·       Extending energy cost relief: make electricity cost relief schemes, including future industrial competitiveness programmes, available to more electricity-intensive retailers.

·       Changing how renewable energy costs are funded: remove renewable energy policy costs from electricity bills and fund them centrally instead.

·       Reforming electricity levies and system charges: review how renewable levies and other system costs are recovered to reduce the burden on electricity customers.

·       Making network charges more predictable: improve the stability and transparency of network charges, particularly transmission costs, so businesses can plan and budget with greater confidence.

While these changes would require government action, there are still steps you can take now to make your business more energy-efficient and reduce avoidable spending.

What can you do to cut your business energy costs?

You don’t need to invest thousands of pounds in new equipment to start making savings. Small changes to the way you light, heat, cool and operate your premises can add up over time.

Here are some tips to help you get started.

Switch to LED lighting

Lighting can be a significant source of energy use in shops, especially where displays, signage and sales floors need to remain illuminated for long periods.

Replacing traditional incandescent or halogen bulbs with LEDs can reduce lighting energy consumption substantially.

Start by replacing the lights you use most often, such as those in shop windows, sales areas and stockrooms. Make sure outdoor lighting and illuminated signs are switched off when they’re not needed, and check whether you can use daylight more effectively during opening hours.

Install sensors and timers

There’s little point in paying to light an empty stockroom, staff toilet or back office. Occupancy sensors and automated timers can switch lights off when areas aren’t being used.

Depending on how much lighting is currently being wasted, these controls can deliver notable savings.

Power down equipment outside opening hours

Computers, tills, display screens, printers, chargers and other electrical equipment can continue using energy when your business is closed. Some devices also consume standby power even when they appear to be switched off.

Switch off non-essential equipment at the end of the day, unplug chargers where appropriate, and use switched power strips to make it easier to turn off several devices at once.

You could also review whether every workstation needs a desktop computer. Laptops generally use less electricity than comparable desktop setups, although the savings will depend on the equipment and how it is used.

Remember to leave essential systems, such as security equipment, refrigeration and any equipment that needs to run continuously, switched on.

Check your refrigeration and fridge seals

If you run a food shop, convenience store, café or any other business that relies on refrigeration, your fridges and chillers could account for a substantial proportion of your electricity use.

Poorly fitted door seals allow cold air to escape, forcing refrigeration systems to work harder. Dusty condenser coils, blocked ventilation and incorrect temperature settings can also increase energy consumption.

Check door seals regularly, clean condenser coils according to the manufacturer's instructions, and ensure ventilation grilles are clear. Keep refrigeration units away from direct sunlight and other sources of heat where possible.

Make better use of your smart meter

A smart meter can help you understand when your business is using electricity and identify opportunities to reduce waste. Depending on your meter, supplier and tariff, you may be able to access half-hourly or daily consumption information.

This can help you spot unexpected overnight usage, equipment that is running unnecessarily and periods when electricity demand is particularly high.

Review your business energy tariff

When did you last review your electricity contract? If you’ve been on the same deal for some time, you could be paying more than necessary.

Compare your current rates, standing charges, contract end date and any exit fees with alternative business energy deals. Don't focus on the unit rate alone: a tariff with a lower electricity rate may still work out more expensive if its standing charge is higher.

Use a comparison service, such as Uswitch, to explore available business energy deals. Check the terms carefully, and compare the total estimated cost rather than just the headline price.

Review your heating and cooling

Heating and air conditioning can be expensive, particularly in shops with regularly opened doors, large windows or high ceilings.

Small adjustments to temperature settings, maintenance and operating schedules can help reduce unnecessary consumption without making your premises uncomfortable for customers or staff.

Carry out an energy audit

An energy audit can help you understand where your business is using the most electricity and which improvements are likely to deliver the best return.

You don't necessarily need to hire a specialist straight away. Start by reviewing your energy bills, recording meter readings and identifying equipment that operates for long periods.

For more complex premises or energy-intensive operations, a professional energy assessment may help you identify savings that aren't immediately obvious.

Train your team to spot energy waste

Even the most efficient equipment can waste energy if it's used incorrectly. Getting your staff involved can make energy saving part of your everyday business routine.

You could also appoint an energy champion to monitor usage and suggest improvements. Sharing progress with your team helps everyone understand the difference small changes can make.

Investigate grants and business energy support

You may not have to fund every efficiency improvement yourself. Depending on where your business is based, its size and the type of work involved, you could be eligible for local energy-efficiency support or decarbonisation funding.

Check the GOV.UK website, your local council, regional growth hubs and relevant business support organisations.

Look for support covering measures such as lighting upgrades, heating improvements, insulation, energy audits or more efficient equipment. Eligibility, funding amounts and application windows vary, so check the current criteria before committing to any work.

Small changes can make a big difference

Rising electricity costs are a challenge for retailers of every size, and smaller businesses may have less room in their budgets to absorb another increase.

You can't control government levies or network charges, but you can take steps to understand your energy use, reduce waste and make sure you're getting the best value from your energy contract.