Recent escalation in the Middle East has triggered renewed volatility across global gas and power markets. While wholesale price movements often dominate headlines, they are only one part of the story.
At the same time, UK businesses are facing significant structural cost pressures from non-commodity charges, particularly Transmission Network Use of System (TNUoS) costs.
Recent announcements indicate a 61% increase in TNUoS charges from April 2026, making it one of the most material and widely discussed developments in the energy market.
Periods of geopolitical uncertainty tend to expose underlying contract structures and cost drivers. For many organisations, this combination of wholesale volatility and rising fixed network costs requires a more strategic response.
At ARO, we work closely with our clients to provide clear, actionable guidance, helping businesses understand both the immediate market backdrop and the structural changes ahead.
What are TNUoS Charges and Why are They Rising?
TNUoS charges are fees paid by businesses for the use of the electricity transmission network. They fund the maintenance and upgrading of the national grid to ensure reliable delivery of electricity across the UK.
Ofgem has budgeted for large-scale investment to accelerate the UK’s transition away from fossil fuels. These infrastructure projects, including the ongoing development of Sizewell C and wider grid reinforcement, are driving significant cost increases.
While some lobbying has extended payback periods slightly, the overall direction remains clear: network investment is increasing, and costs are being recovered through higher charges.
In parallel, other non-commodity charges are also changing:
- Balancing Services Use of System (BSUoS), Capacity Market (CM), Renewables Obligation (RO) and Feed-in Tariffs (FIT) are now indexed to CPI rather than RPI.
- Distribution Use of System (DUoS) rates are expected to rise under Ofgem’s latest reform plan from April 2028.
- For businesses on pass-through contracts, these changes will begin to reflect in bills from 1 April 2026.
Importantly, most TNUoS costs sit within the standing charge. This means reducing consumption alone may not significantly reduce overall exposure.
How Much Could This Affect Your Costs?
Total impact depends on your consumption profile and contract type, but combined wholesale and non-commodity costs are expected to move into the mid-to-high 20p/kWh range.
In volatile geopolitical conditions, wholesale markets may fluctuate sharply in the short term. However, network charge increases are structural and policy-driven, making them less likely to reverse quickly.
This creates a dual challenge:
- Short-term wholesale volatility
- Long-term structural cost increases
ARO supports clients by modelling forward scenarios, stress-testing budgets, and forecasting non-commodity exposure using specialist tools and market intelligence.
Strategies to Mitigate the Impact
Despite the headline increases, businesses are not without options.
Explore BICS Exemptions
Certain energy-intensive sectors may qualify for the British Industrial Competitiveness Scheme (BICS) from April 2027, potentially reducing RO and other charges.
Evaluate Contract Structures
Understanding the balance between standing charges and unit rates is critical. Contract design can materially influence exposure during both volatile and stable market periods.
Monitor Regulatory and Lobbying Outcomes
Suppliers and industry groups continue to engage with regulators. Staying informed allows businesses to act quickly if adjustments arise.
Forecast Multiple Market Scenarios
Wholesale volatility linked to geopolitical events may stabilise over time, but network charges will likely remain elevated. A structured long-term procurement strategy is therefore essential.
At ARO, we combine regulatory insight with commercial modelling to help clients move from reactive decisions to strategic planning.
New Commercial Opportunities: Peer-to-Peer Energy Contracts
Alongside rising network charges, the market is also creating new commercial opportunities, particularly through peer-to-peer review energy contracts.
These arrangements allow organisations to procure electricity from identifiable renewable generators (such as solar or wind assets) via structured supply agreements. Rather than relying solely on wholesale market exposure, businesses can align demand with traceable renewable supply.
Strategic benefits include:
- Reduced wholesale market exposure
- Greater price transparency
- Enhanced ESG reporting
- Potential long-term price stability
- Demonstrable sustainability progress
As standing charges and network costs rise, these contracts are becoming commercially relevant, not just environmentally attractive.
ARO supports clients in assessing suitability, modelling risk, and integrating these structures into a wider procurement and sustainability strategy.
ARO’s Approach: Clarity in Complex Conditions
In periods of geopolitical tension and structural regulatory change, clarity becomes critical.
“With TNUoS charges set to rise significantly, businesses need to act strategically. At ARO, we guide our clients through market volatility and structural reform, helping them manage cost exposure while advancing their sustainability objectives.”
— Joseph Letras, Sustainability Director, ARO
At ARO, we provide:
- Accurate forecasting of non-commodity charges
- Market insight during volatile conditions
- Strategic procurement advice
- Compliance guidance across evolving regulatory frameworks
- Long-term sustainability alignment
We translate complex regulatory and geopolitical developments into practical, commercially focused actions.
Wholesale markets may fluctuate in response to global events. Network charges are structurally increasing.
Both require informed, proactive management.
Contact ARO to schedule a consultation and review how TNUoS changes, market volatility and contract structure could affect your organisation’s energy strategy.
