Business Energy Bills Have Climbed 25% Since February as Geopolitical Pressures Mount

Six months. That’s roughly how long it’s taken business energy costs to climb a full quarter, according to Cornwall Insight’s latest Business Energy Cost Forecast, published 20 August 2026. A typical 12-month electricity contract for a small industrial and commercial site — think a larger retail unit, a leisure venue, or a small manufacturer — now costs around £638,500 a year, up 25% since February. Gas has moved even further, with the same archetypal business now facing a bill of roughly £1.15 million, also up around 25% on where it stood before the conflict began.

What makes this figure worth tracking isn’t just its size. It’s the direction of travel. This isn’t a single shock that hit and faded — it’s an increase that has built steadily, month on month, as the conflict between the US and Iran has dragged on, and it’s one Cornwall Insight expects to stay elevated through the rest of the year and into early 2027. For UK SMEs, understanding how this 25% figure actually built up, and what Cornwall Insight’s own analysts are saying about where it goes next, matters more than just knowing the headline number.

How the 25% Figure Actually Built Up

March: The First Shock Hits

Cornwall Insight’s first warning came on 25 March 2026, barely a month after the Middle East conflict broke out. At that point, electricity bills had already risen by an average of 10% to 30% since late February, depending on sector and business size, with gas rises forecast to run steeper still, somewhere between 25% and 80%. A typical small industrial and commercial electricity contract was already costing £96,000 more than one agreed in early February, with gas bills up £376,000 over the same window.

August: The Picture Settles Into a Clear 25%

By the time Cornwall Insight published its update in August, five months into the conflict, the range had settled into a more consistent figure: a 25% rise across both electricity and gas for the typical small I&C site, pushing the annual electricity contract to roughly £638,500, and gas to around £1.15 million. Jacob Briggs, Energy Users Lead at Cornwall Insight, put the cause plainly: gas prices have been climbing for six months, largely driven by the ongoing US-Iran conflict, and those costs are landing squarely on business energy bills.

Heatwaves Added Their Own Pressure Over Summer

The conflict hasn’t been working alone. Heatwaves across Europe through the summer months pushed up demand for cooling and air conditioning at exactly the point when wholesale markets were already under strain, compounding the geopolitical pressure rather than offsetting it.

Why Gas Has Moved Further Than Electricity

The two fuels haven’t responded in exactly the same way, and understanding why matters if your business is weighing up its own contract position.

Gas Sits Closer to the Source of the Shock

Because the conflict has directly disrupted Gulf shipping routes and gas-producing infrastructure, gas prices have consistently shown the sharper reaction. Cornwall Insight’s March forecast put potential gas increases as high as 80% at the top end, compared with 30% for electricity, and while the August figures converged closer to 25% for both, the earlier divergence tells you where the underlying pressure is really coming from.

Electricity Costs Are Shaped by More Than Just Wholesale Gas

While gas-fired generation still links UK electricity prices to the gas market, electricity bills are also shaped by network charges, policy costs, and generation mix, meaning the relationship between a gas price shock and an electricity bill is less direct, even if the end result — a 25% increase — ends up looking similar on paper.

Why Some Businesses Feel This Far More Than Others

How You Buy Your Energy Determines How Exposed You Are

Cornwall Insight is clear on this point: how exposed a business is to these price increases comes down almost entirely to how it buys its energy. Larger companies that hedge, locking in prices months or years ahead, are often insulated from a short-term wholesale spike, since their rate was agreed before the conflict pushed prices up. Businesses that were due to renew, or that buy on shorter-term or more exposed contracts, have felt the full force of the increase far more directly.

Nearly 90% of Business Energy Users Get No Policy Support at All

Government relief exists, but it’s narrow. Around 500 businesses currently receive energy relief through exclusion from certain policy mechanisms, including the Renewables Obligation, Feed-in Tariff, Contract for Difference, and Capacity Market charges, alongside network cost rebates. Set against the scale of the UK’s business energy market, Cornwall Insight estimates that nearly 90% of business energy consumption comes from businesses receiving no support on their policy costs whatsoever. For the vast majority of UK SMEs, that means the full weight of this increase lands without any cushion.

Households Had a Buffer Businesses Never Got

When the conflict first broke out, domestic customers had a built-in delay — Ofgem’s household price cap doesn’t update instantly, so the next change wasn’t due until July, giving households a few months before the shock reached their own bills. Businesses had no such buffer. Without a price cap of any kind, commercial customers began absorbing the impact of the Strait of Hormuz disruption and the wider conflict almost immediately.

The Knock-On Effect: Investment Decisions Are Being Shelved

Businesses Can’t Plan Around What They Can’t Predict

Briggs has been direct about the wider consequence of sustained high bills: continued pressure on costs weighs on investment decisions, and businesses understandably find it difficult to commit to expansion when they cannot predict what their energy costs will look like even a year ahead. That’s not an abstract warning — it’s a direct read on why so many UK businesses have pulled back on capital spending through 2026.

Energy Procurement Has Become a Strategic Decision, Not a Routine Purchase

For businesses used to treating energy as a straightforward, set-and-forget overhead, this year has forced a shift. With costs this volatile, and this exposed to events entirely outside any business’s control, how and when a company buys its business energy has become a genuinely strategic decision, not a routine renewal to tick off the list.

Press Coverage Reflects the Scale of the Concern

The scale of this story hasn’t gone unnoticed. Major UK titles have covered the pressure building on commercial energy bills throughout the year, with headlines warning that firms face higher energy bills for two more years, and describing how grid and policy fees are increasingly loading extra cost onto larger business bills. When national business and financial press are tracking a story this consistently, it’s a reasonable signal that the pressure isn’t a short-term blip businesses can simply ride out.

What Cornwall Insight Expects Next

No End to the Conflict in Sight

As of the August update, Briggs noted there is no end to the conflict in sight, and that businesses renewing contracts this year are facing a tougher market than they might reasonably have expected even a few months ago. That’s a sobering assessment for any business with a renewal coming up before the end of 2026.

Elevated Prices Are Expected to Persist Into Early 2027

Cornwall Insight’s own forecast points to prices remaining elevated through the rest of the year and into early 2027, rather than a quick return to pre-conflict levels. For UK SMEs, that’s a meaningful planning signal: this isn’t a cost spike to simply wait out before things return to normal.

What UK SMEs Should Do With This Information

1. Check Exactly Where Your Renewal Sits Against This Timeline

If your contract renews before early 2027, understanding that Cornwall Insight expects continued pressure through that window should shape how you approach the renewal, not just the price itself. Comparing the market now, rather than waiting, gives you more room to find the most competitive option still available.

2. Understand Whether You’re Exposed or Protected

If your business hasn’t reviewed how its current contract was priced relative to this timeline, it’s worth finding out. A fixed deal agreed before late February may still be offering genuine protection; one up for renewal now is being priced directly into this elevated market.

3. Don’t Assume Policy Relief Applies to You

With only a few hundred businesses currently covered by specific policy cost exclusions, the vast majority of UK SMEs should assume no government relief is currently reducing their exposure to this increase, and plan accordingly.

4. Compare Gas and Electricity Separately

Given how differently gas and electricity have moved through this period, reviewing business gas and electricity contracts independently, rather than accepting a single bundled quote, is likely to produce a clearer, more accurate picture of where genuine savings remain available.

5. Treat Energy as a Strategic Line Item, Not a Routine Renewal

With elevated prices expected well into 2027, this is a reasonable moment to build a genuine ongoing review process into how your business manages energy costs, rather than only checking in once every contract term.

How Beta Energy Direct Helps SMEs Respond to a Mounting Crisis

At Beta Energy Direct, based in Manchester and working with SMEs and corporates across the UK, we track exactly this kind of unfolding market pressure, so our clients aren’t finding out about a 25% increase after it’s already landed on their invoice. When Cornwall Insight’s own data points to continued pressure into 2027, acting on accurate, current market information matters more than ever.

Our approach gives you:

• Effortless comparison of live tariffs across the whole business energy market
• Dedicated, qualified staff who track exactly how conflict-driven volatility is moving wholesale prices
• Best prices guaranteed on the deals we recommend
• Less paperwork and quicker approvals, so responding to a fast-moving market doesn’t become another delayed task

If your business is feeling the impact of this sustained increase, get a free business energy quote and find out exactly where your current contract stands against today’s market.

A Wider Review Often Pays Off Too

A sustained 25% increase in energy costs is a strong prompt to look at the rest of your utilities spend as well. Many SMEs working with us on energy end up reviewing their broadband and telecom arrangements, and business finance options at the same time, particularly as every regulated utility market offers savings that go unclaimed simply because nobody has compared them recently.

Frequently Asked Questions

Why have business energy bills risen 25% since February 2026?

According to Cornwall Insight, the increase is driven primarily by the ongoing conflict between the US and Iran, which has pushed wholesale gas prices higher over six consecutive months, compounded by summer heatwaves across Europe increasing demand for cooling.

Has the increase been consistent, or has it built up over time?

It’s built up progressively. Cornwall Insight’s March 2026 forecast showed electricity increases of 10% to 30% and gas increases of 25% to 80% in the weeks immediately following the conflict’s outbreak. By August, both fuels had settled into a more consistent 25% increase for a typical small industrial and commercial business.

Are all UK businesses affected equally?

No. Exposure depends heavily on how a business buys its energy. Companies that hedged or fixed contracts before the conflict began are often protected from the worst of the increase, while businesses renewing contracts during this period face the full impact directly.

Does the government offer any relief for rising business energy costs?

Only a limited number of businesses, around 500 currently, receive relief through exclusion from specific policy charges such as the Renewables Obligation and Capacity Market. Cornwall Insight estimates that nearly 90% of UK business energy consumption receives no policy cost support at all.

How long is this increase expected to last?

Cornwall Insight’s analysts expect prices to remain elevated through the rest of 2026 and into early 2027, with no clear end to the underlying conflict in sight as of their most recent forecast.

What should my business do if its energy contract is renewing soon?

Given that elevated prices are expected to persist, comparing the market as early as possible, rather than waiting, gives your business the best chance of securing competitive terms. Request a free quote from Beta Energy Direct to see where your business currently stands.

Don’t Let the Next Six Months Catch You Off Guard

The climb from February to August tells its own story: this is a sustained, mounting pressure on UK business energy costs, not a single event that’s already behind us. With Cornwall Insight pointing to continued volatility into 2027, the businesses that respond to this data now, rather than after their next renewal notice arrives, will be in a far stronger position heading into winter.

Call Beta Energy Direct on (0800) 999-1160 or request your free energy comparison today, and make sure your business energy strategy reflects where the market actually stands, not where it stood six months ago.