Powering Uncertainty: How the non-domestic energy market is holding back small businesses
Powering Uncertainty: How the non-domestic energy market is holding back small businesses 1.02 MB
Small and microbusinesses are fundamental to the British economy, yet many continue to suffer from insufficient protections in the energy market and a seemingly never-ending energy affordability crisis. Despite some improved protections, they remain less protected from rising costs and poor practices. Without regulatory intervention, mounting pressures will continue to threaten the survival of small businesses.
This discussion paper is based on evidence from a quantitative survey and qualitative interviews with small business owners, carried out for Citizens Advice by Yonder. It is based upon the last wave of research conducted in late 2024. Please see here for the full research report 1.34 MB from 2026.
The energy market for small business consumers is a market defined by low engagement and low expectations. Driven by deep-seated disengagement, many small business consumers believe that they lack meaningful control over their energy usage or costs, viewing suppliers as largely interchangeable. Issues with billing, rising costs, and poor customer service are commonplace. In the past 12 months, half (50%) of the surveyed small businesses said that they had experienced a billing issue, and over 1 in 4 (27%) said that they had been in energy debt to their supplier. Despite this, too many small businesses refrain from seeking redress or lodging formal complaints, often due to previous bad experiences or the perceived complexity of the process.
Additionally, the market is defined by stagnation, rather than innovation. The smart meter rollout is continuing to progress, with 66% of small businesses we surveyed having one installed. However, many business consumers without a smart meter remain unconvinced of their benefits, while those we interviewed with a smart meter rarely utilise its full functionality. In addition, although a majority of small business consumers state that they are committed to reaching net zero (62%), high implementation barriers continue to hinder progress, such as the cost of transitioning their business and a lack of awareness about available grants, or their landlord objecting to installations of low-carbon technologies.
To navigate this complex market, many small businesses rely on energy brokers, effectively outsourcing engagement with the market to external actors. 2 in 5 small businesses (40%) surveyed had used an energy broker to purchase their current energy contract. While brokers can provide tangible benefits by simplifying the contracting process, third-party intermediaries (TPIs) are currently unregulated. As a result, unscrupulous practices continue to go unchecked, including misselling, misrepresentation, and opaque contracting practices. This, paired with low consumer awareness of broker responsibilities, means that the TPI market currently fails to protect small business consumers.
Things don’t have to be this way. The new Government has a unique opportunity to make further changes which uplift British businesses, enabling them to grow and thrive. We’re calling on Ofgem and the government to introduce crucial improvements for small non-domestic energy consumers in 3 key areas: customer service and affordability; innovation and flexibility; and regulation of TPIs.
Customer service and affordability: Ofgem should review current billing rules as part of their Consumer Outcomes framework, amend SLC 0A to cover debt and disconnection, and DESNZ should investigate the potential for removing legacy policy costs from non-domestic energy bills.
Innovation and flexibility: DESNZ and MHCLG should work together to introduce obligations on landlords to upgrade premises and install smart meters, as well as introducing new Minimum Energy Efficiency Standards (MEES) for landlords of commercial properties rented by SMEs who are currently exempt. To ensure smart meters are operating properly after they’ve been installed, Ofgem should proceed with its proposed new Guaranteed Standards that will incentivise suppliers to fix issues promptly. They should also extend capital allowances which enable businesses to invest in green technology, and provide clearer guidance for non-domestic consumers interested in installing low carbon technology.
Regulation of energy brokers: Introduce registration requirements and enforceable consumer outcomes, introduce monitoring and enhance market transparency, strengthen paths to independent redress and advice, and improve consumer protections by banning misrepresentation, with wider improvements to the consumer journey by introducing a cooling-off period.