UK Wholesale Electricity Prices 2023 Guide

When you switch business electricity suppliers, the wholesale market will affect the cost of your tariff.

The wholesale market can be volatile and switching when prices are low could help you reduce your energy bills. The tariff type you select can also determine how much wholesale energy price changes affect your tariff.

When you compare with Business Electricity Prices, our experts can advise you on all aspects of the switching process. This includes choosing the right tariff for your business, whether you want to take advantage of potential reductions in price or keep your unit costs stable.

How Does The Wholesale Electricity Market Work?

The wholesale electricity market involves competing generators offering their electricity output to energy suppliers. Suppliers will then re-price the electricity and sell it to businesses and households.

Electricity can also be imported through interconnectors which are currently in place between Britain and France, the Netherlands, and Ireland. National Grid Electricity Transmission (NGET) has overall responsibility for the wholesale electricity system.

The general energy market is pretty volatile and fluctuates based on demand for both business users and domestic.

Unpredictable weather in the UK puts greater demand on the National Grid, especially during colder spells when there are additional requirements for heating. This typically drives wholesale energy prices up, both from the wholesaler and imports.

Are Wholesale Prices Increasing?

Energy companies are quick to blame higher-priced tariffs on the external market when they increase unit costs immediately after a wholesale price rise.

The beginning of the Coronavirus pandemic had a profound effect on wholesale electricity prices, crashing to a lower rate than we have seen in years. However, it has since recovered to pre-pandemic levels and showing a level of stability once again.

The chart below shows how wholesale electricity prices have recovered to pre-pandemic levels.

Source: OVO Energy

How Do Wholesale Energy Prices Affect Your Bills?

You can usually expect a price increase over time. This typically won't happen overnight, but what happens to your energy bills depends on the type of tariff you have agreed to.

The Coronavirus Pandemic is a key example of how external and global events can impact prices. As businesses closed down for large parts of 2020, demand decreased and so did prices. As businesses open up again, the demand has largely returned.

Despite increasing prices, comparing energy suppliers means you will likely always find a better business energy deal.

If you're on a fixed-rate tariff, you are secure and the price you pay for your electricity cannot be changed. However, your electricity prices can change if you have a variable tariff. Ofgem does have a price cap in place to protect consumers from being charged above a certain fresh hold.

Can Businesses Buy Directly From The Wholesale Market?

Some large industrial businesses do purchase their electricity on the wholesale market although this is rare. All other businesses will have to choose a business energy supplier to manage their usage.

Should I Renew My Business Electricity Contract Now?

We advise businesses to compare electricity quotes every six months to a year. As wholesale electricity prices are highly volatile, suppliers are regularly updating prices and tariffs. This means that a better energy deal could always be available.

If you let your energy contract roll over and fail to renegotiate, prices can increase by as much as 120%.

Research shows that as many as 80% of businesses simply allow their tariff to roll over to the next year. Whilst it is expensive for home energy, businesses using lots of energy could see their profits take a large hit from not searching for the best energy prices.

The contract extension will happen automatically if you don’t renew correctly and for most businesses, this will result in increased rates.

By comparing with Business Electricity Prices, you can access business electricity quotes from a wide range of suppliers in seconds to find great business electricity deals.

We make the process of finding the right electricity tariff for your business simple. You can compare a variety of tariff types and contract lengths to ensure you switch to a deal that best suits the needs of your business.