UK electricity demand: why it matters for business competitiveness and what must change

Energy has always been on the agenda for UK businesses. The difference now is how quickly it has moved from a line in the procurement budget to a question of confidence, investment and competitiveness.

In this article, Christopher Dalley and Josh Buckland look at why electricity demand matters to UK competitiveness, how pricing signals could make or break the case for electrification, and what needs to change if An Electric Britain is to support growth in practice, not just in principle.

About the authors:

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Christopher Dalley, Director of Business & Wholesale at EDF
Christopher leads EDF’s Business & Wholesale division, working with commercial and industrial customers to navigate energy markets, manage risk and deliver value through supply, optimisation and flexibility solutions.

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Josh Buckland, Director of Strategy and Policy at EDF
Josh leads strategy and policy for EDF in the UK, focusing on market design, regulatory frameworks and the role of electrification and infrastructure investment in delivering a secure, affordable and low-carbon energy system.

In this article

• Why are UK businesses worried about energy costs?
• Why does electricity demand matter for affordability?
• Why do pricing signals matter?
• Why is electrification an economic strategy?
• What are practical examples of EDF supporting electrification?
• Why do data centres matter for UK electricity demand?
• Why does manufacturing matter?
• Recommendations
• UK electricity demand FAQs

Why are UK businesses worried about energy costs?

Businesses have always watched energy costs closely. What feels different today is the combination of volatility, scale and strategic importance. Electricity is no longer just something to buy well once a contract expires. It is starting to shape where businesses invest, how they operate and how confidently they plan.

EDF’s Business Energy Tracker 2025 found that 54% of businesses say energy costs are negatively affecting confidence, while 79% expect their overall energy costs to increase over the next 12 months. Nearly half of businesses surveyed say energy now accounts for 25% or more of total business costs.¹

Bills are also becoming harder to explain in simple wholesale-price terms. Ofgem is reviewing how costs are allocated across the energy system as customers use electricity in new ways, from EV charging to heat pumps. That review matters because the way costs are recovered will influence who electrifies, when they do it and whether the commercial case stacks up.⁷

Why does electricity demand matter for affordability?

This can sound counterintuitive. Demand is often talked about as pressure on the system. But productive electricity demand can also help make the system more investable and, over time, more affordable.

Christopher Dalley, Director of Business & Wholesale at EDF, argues that stimulating electricity demand is central to improving long-term system outcomes.

“If we can stimulate more electricity demand, that lowers the burden on paying for system costs, encouraging more demand and investment in turn. It becomes self reinforcing.”
Christopher Dalley, Director of Business & Wholesale, EDF

That does not mean all demand is good demand. The UK needs demand that is useful: efficient, flexible and tied to real economic activity. In other words, demand that helps businesses grow, cuts carbon and makes better use of infrastructure already being built.

Why do pricing signals matter?

Pricing signals matter for a simple reason: they change behaviour.

Load too many fixed or policy costs onto electricity and some businesses will pause. A manufacturer looking at electric heat, a logistics operator planning depot charging or a data centre developer choosing between sites will all ask the same practical questions: what will electricity cost, will it be available, and can I build a business case around it?

Clearer pricing and steadier policy would not solve everything. But they would make it easier for businesses to invest, for demand to grow in the right places, and for future infrastructure to be used well.

Why is electrification an economic strategy?

Electrification is often discussed as a carbon issue. It is that. But for businesses and for the UK economy, it is also a competitiveness issue.

Josh Buckland, Director of Strategy and Policy at EDF, highlights the importance of combining infrastructure investment with electrification.

“If you combine investment in infrastructure with electrification, the growth you unlock is more significant, and it plays to the full strength of the energy transition.”
Josh Buckland, Director of Strategy and Policy, EDF

Done well, electrification can reduce exposure to volatile fossil fuel markets, improve efficiency and cut carbon. At national level, it can also support investment, energy security and industrial competitiveness.

What are practical examples of EDF supporting electrification?

We see this most clearly when customers move from ambition to delivery.

Tesco is a good example. EDF has worked with Tesco across supply, renewables and long-term contracting, including renewable electricity, rooftop solar and Corporate PPAs. The programme has included 17 roof-mounted solar installations, 15,000 solar PV panels and 5MWp of installed capacity. EDF has also helped structure a multi-party Corporate PPA supporting four new-build wind farms and five new solar farms.^2,3,4

Pod, part of EDF, is another practical example. It supports EV charging for homes, workplaces and fleets. For businesses, that means charging for company cars, workplace users and electric fleets can be planned as part of a wider energy strategy, rather than treated as a separate facilities project.^5,6

Why do data centres matter for UK electricity demand?

Data centres bring the issue into sharp focus.

AI and cloud adoption are increasing power requirements, while grid constraints are influencing where and when new projects can be delivered. In 2026, the UK Government said the queue for demand connections to the transmission network had grown by 460% in six months, and that reforms would prioritise strategically important projects including AI data centres, EV charging hubs and electrified industrial sites.⁸

So the question is no longer just how quickly data centres can be built. It is whether the UK can provide the affordable, reliable and low-carbon power needed to support them.

For operators, energy strategy now covers supply, risk management, metering, flexibility, storage, low-carbon procurement and grid access. For the UK, the point is just as direct: if we want digital infrastructure investment here, the electricity system has to be ready for it.

Why does manufacturing matter for UK electricity demand?

For energy-intensive manufacturers, electricity costs are not abstract. They affect whether to expand, electrify processes, invest in new equipment or put capital somewhere else. Electrification can help modernise operations and reduce exposure to gas markets, but only if the numbers work.

That might mean electric heat, on-site generation, storage, flexible demand or smarter controls. It also means asking some very practical questions: when do we use energy, how much can we shift, and what makes the investment case credible?

This is where EDF has a useful vantage point. We work across customer supply, wholesale markets, generation, flexibility, policy and electrification. That means we see both sides of the challenge: businesses need reliable, affordable electricity, and the system needs demand that supports investment rather than holding it back.

Recommendations 

If electricity demand is going to become a growth engine rather than another cost pressure, four things need to happen.

1. Create pricing signals that support electrification

   The UK needs cost recovery and market signals that make efficient electricity use attractive, not harder to justify.

2. Give businesses clearer long-term policy certainty

   Energy decisions are investment decisions. Businesses need a clearer view of how electricity costs may evolve to 2030 and beyond, especially when they are making long-term choices about sites, fleets, heat, storage and production.

3. Treat demand flexibility as core infrastructure

   Flexible demand from businesses, data centres, EV charging, batteries and industrial assets should be treated as part of the system, not as a nice-to-have.

4. Help businesses connect energy strategy with growth

   For commercial and industrial organisations, energy strategy cannot sit in a procurement silo anymore.

5. Businesses should look at future electricity needs, site constraints, metering data, flexibility potential, on-site generation and exposure to non-energy costs, then connect that work to growth and investment planning.

6. EDF’s Business Energy Tracker suggests many businesses are already moving in this direction. 

   Seventy-one percent of businesses named increasing energy efficiency as their main strategy for managing energy risk, while 40% cited using energy management tools and 40% cited shifting demand to off-peak times.¹

Conclusion: from cost pressure to growth engine

The UK can treat electricity demand as another pressure on the system. Or it can treat it as part of the answer to competitiveness, investment and growth.

For businesses, the transition is not a future event. It is already affecting costs, assets and investment plans. The question is whether they can use it to strengthen resilience and competitiveness.

For the UK, the prize is bigger: an electricity system that gives businesses the confidence to build, manufacture, process data and create jobs here.

That is what building An Electric Britain should mean.

UK electricity demand FAQs

Why does electricity demand matter for UK businesses?

Electricity demand affects affordability, investment, competitiveness and the ability of businesses to electrify. If demand grows productively and flexibly, it can improve infrastructure utilisation and support long-term system efficiency.

Can higher electricity demand reduce costs?

Higher demand can help spread fixed system and infrastructure costs across a wider base, but only if it is efficient, flexible and supported by the right infrastructure and pricing signals.

Why are non-energy costs important?

Non-energy costs include network, balancing, capacity and policy costs. They form a significant share of electricity bills, so businesses need to understand more than the wholesale energy price.

What is flexible electricity demand?

Flexible electricity demand is the ability to shift, reduce or optimise energy use in response to price, grid or carbon signals. It can help customers manage cost and support the wider electricity system.

How can businesses prepare for electrification?

Businesses can prepare by understanding future energy needs, assessing grid and site constraints, improving metering data, exploring on-site generation or storage, and considering flexibility opportunities.

What is EDF’s role in supporting business electrification?

EDF supports business electrification through supply, renewable electricity, Corporate PPAs, on-site generation, metering, flexibility, EV charging through Pod and wholesale market expertise.

¹ EDF Business Energy Tracker 2025
² EDF, “Powering Tesco to Net Zero through on-site generation”
³ EDF Renewables, “EDFR signs deal with Tesco for supply of solar and wind power”
⁴ EDF, “Setting up a multi-party Corporate PPA for Tesco”
⁵ EDF, “Electric Car Charging Points for Business”
⁶ Pod, “Commercial EV charging from Pod”
⁷ Ofgem, “Ofgem announces major review into how costs are allocated across the energy system”
⁸ GOV.UK, “Government to tackle speculative demand grid connection requests”