A quick note from me (Josh):
Welcome to The George Briefing. Each week, my co-founder Lu and I use our tech-focused lens to go directly to the source of change in the UK energy market, the official publications from Ofgem and the UK Government. Our goal is to cut through the noise and deliver the key regulatory developments and changes that will impact your business's bottom line, all explained in simple, actionable terms.
This weeks developments are:
Mandatory Modernization: Is Your Business in a Heat Network 'Zone'?
Turn Down, Get Paid: The Grid Wants to Pay Your Business to Use Less Energy
The End of the Flat Rate? How a Grid Upgrade Will Change Your Business Electricity Bill Forever
This Week's B2B Market Pulse
Six More "Hidden Gem" Stories You Might Have Missed
LATEST DEVELOPMENTS
Department for Energy Security and Net Zero
Image source: Gemini / Meet George
The Spark: If your business is in one of 28 pilot locations across England, you could soon be legally required to connect to a local heat network as the government trials a major shift away from gas boilers.
The details:
The UK government is piloting a 'heat network zoning' policy in 28 towns and cities across England, including parts of London, Manchester, and Birmingham.
Within these designated zones, certain buildings, including commercial properties, will face a legal requirement to connect to a new or existing district heat network.
This policy is designed to identify areas where heat networks are the most cost-effective, low-carbon solution for heating, aiming to accelerate the move away from individual gas boilers.
The initiative is backed by the Energy Act 2023 and is a core part of the government's strategy to scale up low-carbon heating infrastructure to meet net zero targets.
Why it matters: Let's translate the jargon. 'Heat network zoning' means the government is drawing lines on a map and saying, 'If your business is inside this line, you will eventually have to use our designated heating system.' This moves the decarbonisation of your heating from a choice to a mandate. For businesses in these zones, it introduces a significant new compliance risk and a future capital expenditure that needs to be factored into long-term financial planning. While the immediate impact is limited to pilot areas, it's a clear signal of the direction of travel for urban commercial properties, potentially affecting everything from property valuations and service charges to operational budgets.
What you can do:
Check the official government list of the 28 pilot zones to see if your business premises are located within one.
If you are in a pilot zone, contact your local authority's energy or planning department to understand the proposed timeline and potential impact on your specific building.
Review your property lease agreement now to clarify who is responsible for capital upgrades to heating systems – you or the landlord. This will be a critical financial question if a mandatory connection is enforced.
Department for Energy Security and Net Zero
Image source: Gemini / Meet George
The Spark: The government is proposing changes that could soon pay even smaller businesses to reduce their energy use when the national grid is under stress.
The details:
The Department for Energy Security and Net Zero (DESNZ) has launched a consultation on reforms to the Capacity Market (CM).
The key proposal is to make it easier for businesses to get paid for offering 'consumer-led flexibility' – also known as Demand Side Response (DSR).
This involves lowering the minimum participation threshold, which currently sits at 1 Megawatt (MW), a level that excludes most SMEs.
The aim is to use flexible demand from businesses as a cheaper and greener way to balance the grid, reducing the need to pay expensive fossil fuel plants to be on standby.
Why it matters: Let's cut through the jargon. The 'Capacity Market' is an insurance policy you already pay for through a hidden charge on your energy bill to prevent blackouts. 'Consumer-led flexibility' is the government's plan to pay businesses like yours to be part of that insurance. Instead of only paying giant power stations to be on standby, the grid could pay you to briefly turn down your air-con or pause a production line. Historically, this was a club for massive industrial sites only. Lowering the entry requirements signals a major shift, potentially turning your energy consumption from a pure cost on your P&L into a flexible asset that can generate revenue.
What you can do:
Audit your assets: Identify your most energy-intensive equipment (e.g., HVAC, refrigeration, machinery) and determine which processes could be paused for 30-60 minutes without significant operational disruption.
Question your supplier: Ask your current energy supplier or broker if they offer Demand Side Response (DSR) services or partner with an 'aggregator' who can bundle smaller businesses together to participate.
Analyse your data: If you have a smart meter, review your half-hourly consumption data to understand when your business hits its peak demand. Knowing your own usage pattern is the first step to managing it profitably.
Department for Energy Security and Net Zero
Image source: Gemini / Meet George
The Spark: A major behind-the-scenes upgrade to the UK's energy grid is now live, setting the stage for smart tariffs that will bill your business based on when you use electricity, not just how much.
The details:
The UK energy market has hit a key milestone for Market-wide Half-Hourly Settlement (MHHS), a reform that will shift electricity billing from estimates to actual half-hourly consumption data.
This change is designed to better reflect the true cost of energy throughout the day, enabling suppliers to offer more innovative and competitive 'time-of-use' tariffs.
The transition is not instant; the migration of all business and residential meters to the new system will take place over the next 18-24 months.
The new settlement system is expected to be fully operational by July 2027, at which point half-hourly settlement will be the market standard.
Why it matters: Let's translate the jargon. 'Market-wide Half-Hourly Settlement' is the industry's plumbing upgrade to make smart meters truly smart for everyone. For years, most businesses have been billed on a simple, flat rate per unit, regardless of when they used the energy. MHHS ends that. It rebuilds the billing system so that the price you pay can directly reflect the high demand at 5 PM versus the low demand at 3 AM. For a business's P&L, this is a double-edged sword: it creates a major opportunity to cut costs by shifting operations to cheaper times, but it also introduces the risk of bill shock if you continue energy-intensive work during newly expensive peak periods without a strategy.
What you can do:
Confirm your meter type: Check if you have a smart meter (SMETS2) or an AMR meter capable of recording half-hourly data. If you don't, contact your supplier to schedule an installation to ensure you're ready for the change.
Map your daily consumption: Start analysing your operations to understand when you use the most electricity. Identify your peak hours now so you can begin planning how to shift non-essential loads to cheaper periods.
Question your supplier or broker: Ask them about their roadmap for MHHS. Find out when they expect your sites to be migrated and what types of new, time-of-use tariffs they plan to introduce for businesses.
LATEST MARKET NUMBERS
⚡ B2B Market Pulse
Wholesale Electricity Price (weekly avg.): 5.70 p/kWh (📈 +0.63 p/kWh / +12.4%)
Power prices rebounded sharply, reversing last week's surprising drop and adding significant cost pressure.Wholesale Gas Price: 2.76 p/kWh (🔻 -0.15 p/kWh / -5.2%)
Gas prices fell, providing a bullish signal that failed to translate into cheaper electricity.UK Carbon Price (UKA): £57.17 per tonne (📈 +£2.91 / +5.4%)
The cost of carbon continued its steady climb, adding a persistent underlying cost to power generation.Wind + Solar Generation (Share of UK Mix): 41.2% (📈 +2.8 pts / +7.3%)
Renewable output recovered well from last week's dip, crossing the 40% threshold for grid contribution.
The Meet George Take
This week, the market's puzzle deepened, presenting the opposite conundrum to the one we saw last week. All the key indicators for cheaper electricity aligned: wholesale gas prices fell by over 5%, and renewable generation recovered to provide over 40% of our power. Based on these fundamentals alone, we should have seen electricity prices fall.
Instead, the wholesale electricity price jumped by over 12%.
This sharp disconnect shows that the traditional drivers are losing their predictive power. The rise in carbon price alone is not enough to explain such a significant spike. This points to other, more powerful forces at play, such as a surge in business and industrial demand, a drop in cheaper imported power from Europe, or unexpected outages at major UK power plants tightening the supply margin.
For a business, this serves as another stark reminder that the energy market is no longer simple. A fall in the price of gas no longer guarantees a fall in the price of electricity. Factors like grid demand, interconnector flows, and generator availability are now frequently the most important drivers of the price you pay. This volatility makes having a clear procurement strategy and understanding the real-time dynamics of the market more critical than ever.
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