The Cost of Waiting: What the Iran Crisis Reveals about Business Energy Procurement

Global events can affect your energy bills faster than you think. Many UK businesses assume domestic factors primarily drive their energy costs. Contract renewal dates, supplier negotiations, government policies, and seasonal demand all play a role.

However, recent developments involving Iran provide another reminder that energy markets are fundamentally global. A conflict thousands of miles away can influence wholesale gas prices within days, affecting everything from commercial energy contracts and business energy costs to long-term procurement decisions.

Concerned about market volatility? Book a consultation with Renew & Sustain to review your current contracts and procurement strategy before your next renewal window.

Key Takeaways

• Geopolitical tensions (like the Iran crisis) can spike UK wholesale energy prices within hours, proving markets are fundamentally global.
• Even with record UK renewables, electricity prices stay pegged to gas as the marginal generation source. If gas spikes, electricity follows.
• Delaying a contract renewal by just a few days during a market shock is currently a bigger financial risk than operational energy waste.
• Headline unit rates are misleading. True costs are heavily driven by unreviewed kVA capacity limits and rising non-commodity charges.
• Relying on basic meter data leaves businesses exposed. Securing contracts up to 12 months in advance with precise submetering data protects margins.

Why Is the Iran Crisis Affecting UK Energy Prices?

The Strait of Hormuz is one of the most important energy transport routes in the world. Approximately one-fifth of global oil exports and a significant proportion of liquefied natural gas (LNG) exports pass through this narrow shipping corridor. Whenever geopolitical tensions threaten supply, energy markets respond immediately.

Recent reports have shown:

• Significant increases in wholesale gas prices
• Increased volatility across European energy markets
• Rising oil prices following military escalation
• Concerns about future LNG supply security.

Although the UK generates a growing share of its electricity from renewable sources, wholesale energy prices remain heavily influenced by global markets. That means UK businesses can face higher business energy costs due to events thousands of miles away.

This isn’t a new phenomenon. We saw similar market reactions following Russia’s invasion of Ukraine, disruptions in LNG supply chains, and instability in global shipping routes.

The difference is that many businesses still underestimate how quickly market sentiment can affect procurement opportunities.

Related Reading: How the Russo-Ukrainian War Is Affecting Energy Costs

Why Are Electricity Prices Rising When Britain Produces More Renewable Energy Than Ever?

This is one of the most common questions businesses ask today. The UK has become a global leader in renewable energy generation. Wind farms now contribute a substantial share of national electricity production, while solar generation continues to expand.

Yet the electricity prices UK businesses pay remain stubbornly high. The reason lies in how wholesale electricity markets operate.

Despite significant renewable generation, gas-fired power stations often determine the wholesale electricity price. This means that when gas prices rise, electricity prices often follow suit.

Even if renewable energy supplies a large share of the grid, businesses can still see higher contract prices because gas remains the marginal source of generation during key periods. As a result:

• Rising gas prices increase electricity procurement costs
• Fixed-rate contract offers become more expensive
• Budget forecasting becomes more difficult
• Energy-intensive industries face additional pressure.

This is why many businesses are reviewing not only their procurement arrangements but also their broader approach to renewable energy, energy efficiency, and long-term resilience.

For organisations hoping that increased renewable generation alone will reduce their costs, the reality is more complex.

Understanding this relationship between gas and electricity is essential when evaluating the future electricity prices UK businesses may face.

Related Reading: Why Electricity Prices in the UK Keep Rising for Businesses

The Real Risk Is Procurement Timing

Many businesses focus heavily on reducing consumption, and reducing waste is important. However, one of the biggest cost drivers today is procurement timing.

Consider two similar manufacturing businesses.

• Both consume roughly the same amount of electricity.
• Both operate similar equipment.
• Both require similar levels of capacity.

One reviews its contracts early and secures pricing before market conditions deteriorate. The other delays its decision by a few weeks while evaluating options.

During that period, geopolitical events trigger wholesale price increases. Suddenly, the second business faces significantly higher contract costs despite consuming the same amount of energy.

This is not a hypothetical scenario. Businesses across the UK have experienced exactly this problem for several years. One of the biggest misconceptions in the market is that energy prices move gradually.

In reality, wholesale markets can react within hours.

This is why more businesses are engaging specialist business energy audits, energy procurement, and account management services earlier in the procurement cycle.

The goal is no longer simply securing a contract, but reducing risk exposure.

Why More Businesses Are Seeking Independent Energy Advice

UK businesses are doing more research than ever before. They compare suppliers online, review wholesale pricing data, and investigate government policies and market forecasts.

However, access to information does not necessarily lead to better decisions. In fact, it often creates new risks. Many organisations now arrive at consultations with pages of pricing information but very little understanding of:

• Contract structure risks
• Non-commodity charges
• Capacity implications
• Procurement timing
• Supplier performance
• Future market exposure.

This is changing the role of business energy consultants. Historically, brokers were viewed primarily as deal finders. Today, many businesses are looking for validation, interpretation, and strategic guidance.

They want someone to answer questions such as:

• Is this contract actually competitive?
• Am I exposing my business to unnecessary risk?
• Have I missed hidden costs?
• Is this the right time to buy?
• What happens if the market moves next month?

That shift creates an opportunity for businesses to move beyond transactional purchasing and build a genuine procurement strategy.

Not sure whether your current contract is competitive? Speak with our consultants for an independent review before making a decision.

Related Reading: What to Ask Your Energy Broker Before Signing in 2026: A 10-Point Buyer’s Checklist

What Volatile Energy Markets Mean for Different Industries

Every business is affected by rising energy costs differently. A professional services firm operating from a single office will experience market volatility very differently from a manufacturing facility running around the clock. This is why there’s no universal answer to business energy strategy.

However, one thing remains consistent across every sector: organisations that understand their exposure are generally in a much stronger position than those reacting after prices have already moved.

Manufacturing

Manufacturing remains one of the sectors most exposed to fluctuations in the wholesale market. Production lines, compressed air systems, industrial ovens, process heating, cooling equipment, and heavy machinery all contribute to significant energy consumption. Even relatively small increases in wholesale electricity or gas prices can have a substantial impact on operating margins.

For manufacturers, procurement decisions should rarely focus solely on finding the lowest available unit rate. The more important questions are:

• How much exposure do we have to future price movements?
• Are we purchasing energy at the right time?
• Are we paying unnecessary network or capacity charges?
• Can operational changes reduce peak demand costs?

Many manufacturers are combining energy procurement with smart submetering, kVA analysis and planning, and business energy audits to get a clearer picture of where costs originate and how they can be controlled.

Hospitality and Leisure

Hotels, restaurants, leisure facilities, and entertainment venues face a different challenge. Energy demand tends to fluctuate significantly throughout the day, week, and year. Seasonal peaks can create budget uncertainty, particularly when businesses are operating on tight margins.

For multi-site operators, energy procurement becomes even more complex. Different locations may have different renewal dates, suppliers, consumption profiles, and contractual arrangements.

A coordinated procurement strategy can deliver significant operational benefits by creating consistency, improving forecasting, and reducing administrative burden.

Warehousing and Logistics

Warehousing and logistics businesses are becoming increasingly energy-intensive. Automation systems, conveyor networks, refrigeration equipment, electric vehicle charging infrastructure, and extended operating hours are increasing electricity demand across the sector.

Many operators have discovered that capacity management is just as important as energy procurement. Businesses paying for unused capacity may be wasting thousands of pounds every year. Meanwhile, organisations exceeding their available capacity can face expensive penalties and network constraints.

This is why kVA analysis and planning are becoming an increasingly valuable service for logistics operators looking to control long-term costs.

Care Homes and Healthcare

Unlike many sectors, care homes cannot simply reduce consumption when prices rise. Residents require comfortable temperatures, consistent lighting, hot water, specialist equipment, and uninterrupted operations regardless of market conditions. This all makes cost certainty particularly important.

Rather than focusing on short-term market movements, many care providers are 

adopting longer-term procurement strategies designed to deliver budget stability and reduce financial surprises.

Agriculture

Agricultural businesses face unique challenges due to seasonal demand patterns and specialised equipment requirements. Energy is often required for:

• Refrigeration
• Irrigation systems
• Processing equipment
• Lighting
• Ventilation
• Storage facilities.

These businesses can be especially vulnerable to market volatility if procurement decisions are left until the final stages of a contract renewal. Early planning provides significantly greater flexibility when evaluating commercial energy contracts.

Looking Beyond Unit Rates: The Hidden Costs Businesses Miss

One of the biggest mistakes businesses make when reviewing energy contracts is focusing exclusively on the headline unit rate. At first glance, this seems logical. After all, the unit rate is often the most visible figure presented during supplier comparisons.

The reality is that your total annual energy cost is influenced by far more than the pence-per-kilowatt-hour figure printed on a proposal.

In many cases, businesses can secure what appears to be a competitive rate while still paying thousands of pounds more than necessary because of hidden cost drivers elsewhere in their energy arrangements.

Non-Commodity Charges

Over the last few years, non-commodity charges have become one of the most significant components of commercial energy bills. These charges can include:

• Network costs
• Environmental levies
• Capacity market charges
• Government policy costs
• System balancing charges.

For many businesses, these costs now represent a substantial percentage of their overall bill, yet they are often poorly understood.

This is one reason why our non-commodity charges service has become increasingly important for businesses seeking greater visibility into their energy costs.

Related Reading: The New Electricity Charges UK Businesses Need to Know About in 2025–2026

Capacity Charges

Another commonly overlooked issue involves electrical capacity. Many businesses continue paying for a level of capacity they no longer require because nobody has reviewed their infrastructure requirements since the original connection was established.

Others have the opposite problem. They exceed their available capacity and incur unnecessary charges because their business has grown without corresponding infrastructure reviews.

A detailed kVA analysis and planning assessment can often identify opportunities for immediate savings while reducing future operational risks.

Consumption Patterns

How much energy you use matters. When you use it matters just as much. Businesses operating during peak network periods may face significantly higher costs than organisations consuming the same volume of energy at different times.

Understanding these consumption patterns is increasingly important as the UK energy market evolves. This is where smart submetering can provide valuable insight.

By monitoring energy use at a more granular level, businesses can identify inefficiencies, shift demand where practical, and make more informed procurement decisions.

How Better Data Leads to Better Procurement Decisions

The businesses that consistently achieve the best energy outcomes are those that make decisions based on accurate data. When businesses lack visibility into energy consumption across their operations, every procurement decision becomes a gamble. 

Suppliers are asked to price risk based on incomplete information, and business owners are left making long-term commitments without fully understanding the source of costs.

In today’s market, better data creates better procurement outcomes.

Why Energy Visibility Matters

Many organisations still rely entirely on information from their primary utility meter. While this provides an overall picture of consumption, it tells you very little about what is actually driving costs. For example:

• Which production line consumes the most electricity?
• Which areas of the building generate peak demand charges?
• Are overnight loads higher than they should be?
• Is equipment running unnecessarily outside operational hours?
• Are specific departments responsible for disproportionate consumption?

Without this information, opportunities to reduce costs remain hidden for years. That’s why more businesses are investing in smart submetering and advanced monitoring systems before they enter contract negotiations.

Rather than relying on assumptions, they can enter supplier discussions armed with accurate consumption data and a clear understanding of their operational profile.

The Role of Smart Submetering

Smart submetering allows businesses to monitor energy consumption at a far more detailed level than traditional metering. Instead of viewing an entire facility as a single energy user, organisations can analyse consumption by:

• Production line
• Department
• Building
• Process
• Piece of equipment.

This level of insight reveals inefficiencies that would otherwise go unnoticed. In some cases, businesses discover that a relatively small number of assets account for a significant share of total consumption. In others, they identify opportunities to shift energy-intensive activities away from peak charging periods.

These insights strengthen procurement decisions by providing a more accurate picture of future energy requirements.

Why Business Energy Audits Still Matter

Technology alone doesn’t solve energy challenges. Data only becomes valuable when it leads to action. This is where comprehensive business energy audits continue to play a critical role. A professional energy audit helps answer strategic questions, including:

• Where are costs increasing unnecessarily?
• Which investments offer the strongest return?
• How exposed is the business to future price rises?
• Are current contracts aligned with operational needs?
• What opportunities exist to improve efficiency without disrupting productivity?

For many businesses, an audit acts as the foundation for a much broader energy strategy. Rather than reacting to rising costs, organisations can begin proactively planning for future market conditions.

Related Reading: A Complete Guide to Energy Audits for Businesses in 2026

Compliance Is Becoming Increasingly Important

For larger organisations, procurement decisions can no longer be separated from compliance obligations. Reporting frameworks and sustainability requirements continue to evolve, creating new expectations around transparency and energy performance.

Businesses subject to SECR Compliance or ESOS Compliance requirements increasingly need accurate energy data to support reporting, identify improvement opportunities, and demonstrate progress against sustainability targets.

What starts as a procurement conversation often evolves into a broader discussion about operational efficiency, carbon reduction, and long-term resilience.

This is another reason why the role of energy consultants is changing. Today’s businesses need guidance that extends beyond supplier selection. They need support interpreting data, navigating regulations, and making decisions that support both commercial and environmental objectives.

Renewable Energy Is Becoming Part of the Procurement Conversation

The rise of renewable energy is also changing how businesses approach procurement. Historically, energy procurement focused almost entirely on purchasing electricity and gas from external suppliers.

Today, organisations are increasingly exploring whether some of their future energy needs could be met through on-site generation or renewable technologies. Options such as:

• Solar PV
• Battery storage
• Renewable tariffs
• Power purchase agreements
• Energy efficiency upgrades

are becoming part of mainstream procurement planning.

For many businesses, the goal is to reduce exposure to market volatility while improving long-term cost certainty. This is where renewable energy, net zero consultants, and energy efficiency services increasingly complement traditional procurement activities.

The most resilient organisations are no longer asking, “Who offers the cheapest contract?” They’re asking, “How can we build a more predictable, efficient, and sustainable energy strategy?”

That shift in thinking creates opportunities that simple supplier switching could never deliver.

Build a Smarter Energy Strategy

If you’re approaching renewal, reviewing sustainability goals, or simply trying to understand where your energy spend is going, now is the ideal time to assess your options.

Speak to our consultants about combining energy procurement, business energy audits, smart submetering, and energy efficiency into a single long-term strategy designed around your business.

What Should Businesses Do if Their Contract Expires within the Next 12 Months?

If your current electricity or gas contract is due for renewal within the next year, now is the time to start planning. One of the most common mistakes businesses make is assuming they can wait until the final few weeks before expiry to secure a competitive deal. In stable markets, that approach can be risky. In volatile markets, it can be extremely expensive.

Energy procurement works best when businesses have options. The earlier you begin reviewing your position, the more flexibility you have to evaluate suppliers, assess market conditions, and build a strategy that reflects your operational goals.

The Cost of Waiting

The Iran crisis is unlikely to be the last geopolitical event that affects global energy markets. Before this, businesses faced the consequences of the Russo-Ukrainian conflict, supply chain disruptions, LNG shortages, inflationary pressures, and network charging reforms. Future challenges will inevitably emerge.

Businesses need to prepare for them. The organisations that consistently achieve the best outcomes are the ones that understand their exposure, review contracts early, and make informed decisions based on data rather than urgency.

Waiting may feel like the safer option. In reality, it often leaves businesses with fewer choices, less negotiating power, and greater exposure to events entirely beyond their control.

Review Your Energy Strategy before the Market Moves Again

If your electricity or gas contract expires within the next 12 months, now is the ideal time to understand your options. Our consultants can help you:

• Review existing commercial energy contracts
• Assess procurement risks and opportunities
• Identify hidden costs and non-commodity charges
• Analyse capacity requirements through kVA analysis and planning
• Improve visibility with smart submetering
• Explore renewable energy and energy efficiency opportunities
• Build a procurement strategy aligned with your operational and financial goals.

Whether you’re a manufacturer managing energy-intensive operations, a care provider seeking budget certainty, or a multi-site business preparing for future growth, a proactive review can help you make more informed decisions before your next renewal window arrives.

Book Your Free Energy Risk Review

Don’t wait for the next market shock to discover how exposed your business is. Speak with Renew & Sustain today and build an energy strategy designed for today’s market, not yesterday’s.

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Article Sources

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2. E3G. Europe is bracing for high and volatile energy prices – E3G insights ahead 16-20 March Council meeting. March 12th, 2026
3. BBC. Oil and gas prices jump as conflict escalates. March 2nd, 2026
4. OilPrice. LNG Shock Hits Supply Chains as War Disrupts Global Flows. April 12th, 2026
5. Gov.uk. Energy security, jobs and investment boost through climate action. June 2nd, 2026
6. Gov.uk. Comply with the Energy Savings Opportunity Scheme (ESOS): phase 3. August 14th, 2025