Compliance

Non-commodity costs: which business electricity charges on-site solar avoids

Non-commodity costs are the parts of a business electricity bill that are not the energy itself: network charges, policy levies and the Climate Change Levy. Some are charged per kWh, some per site per day, and one on winter-evening demand, and that difference decides how much of each an on-site solar PPA removes. The government's own guidance says behind-the-meter solar is not subject to the policy costs charged on grid supply.

What this means

Your supplier's price is built from two parts: the wholesale energy, and everything else. The everything else is the non-commodity stack, set through regulated network charging, government schemes and tax, and passed through by your supplier. Below are the latest published rates for each charge, which of them fall when an on-site solar array supplies part of your demand, and which stay the same whatever the panels produce.

Actions to take

• Ask your supplier for a bill breakdown that separates the energy from non-commodity charges, and note which are per kWh and which are per site per day.
• Value an on-site solar PPA against the per-kWh charges it removes, not against your whole bill.
• Treat a sleeved PPA as an energy-only price: the supplier still passes network and policy charges through.
• If you are energy-intensive, check the Supercharger and the British Industrial Competitiveness Scheme before you count policy-cost savings.

What counts as a non-commodity cost

Strip the wholesale energy out of a business electricity price and what is left falls into three groups: the cost of the networks that carry the power, the policy schemes that fund low-carbon generation and security of supply, and tax. Each has its own rule for how it reaches your bill, and those rules are what matter when you install solar.

Sources: NESO, final TNUoS tariffs 2026/27 and NESO, demand residual guidance; National Grid Electricity Distribution, DUoS charging guide; NESO, BSUoS charges and NESO, final BSUoS tariffs 2026/27; DESNZ, Calculating the level of the Renewables Obligation for 2026 to 2027; EMR Settlement, key figures for payment 2026/27; EMR Settlement, Nuclear RAB interim levy rate, October to December 2026; Ofgem, Feed-in Tariffs; NESO, AAHEDC tariff 2026/27; HMRC, Climate Change Levy rates. Read 14 Oct 2026.

Which non-commodity costs an on-site solar PPA avoids

The rule is simple once you see it. A charge that is levied per unit of electricity you take from the grid falls with every kWh your array supplies instead. A charge levied per site, or on your connection, does not. The government's own guidance for the British Industrial Competitiveness Scheme makes the point directly: behind-the-meter solar generation is not subject to the policy costs, the Renewables Obligation, Feed-in Tariffs and Capacity Market, that are charged on grid-supplied electricity.

Two practical points follow. First, how your supply contract passes these costs through decides when you see the saving: a fully fixed contract may not show it until renewal. Second, the fixed lines are why the saving per kWh from solar is smaller than your average unit price, which is total cost divided by total kWh. Compare a solar PPA rate with the per-kWh charges it actually removes.

Sources: GOV.UK, British Industrial Competitiveness Scheme: guidance for applicants; EMR Settlement, key figures for payment 2026/27; NESO, BSUoS charges and NESO, final BSUoS tariffs 2026/27; NESO, final TNUoS tariffs 2026/27 and NESO, demand residual guidance; Ofgem, Targeted Charging Review decision; National Grid Electricity Distribution, DUoS charging guide; HMRC Excise Notice CCL1/3, section 3.12 (updated 24 March 2026).

What the per-MWh levies add up to

There is no official figure for the non-commodity share of a business bill. West Mercia Energy, an energy consultancy, forecast in October 2025 that non-energy elements could make up as much as 70% of a total electricity invoice from April 2026. Treat that as one firm's forecast, not a measured average.

What can be added up is the levies with a published per-MWh rate. For October to December 2026, BSUoS (£12.49), the CfD interim and operational levies (£5.529 and £0.1463), the Nuclear RAB levy (£3.754), AAHEDC (£0.443) and the Climate Change Levy (£8.01) come to about £30.37 per MWh, roughly 3p per kWh. That total leaves out the Renewables Obligation, Feed-in Tariff costs and distribution unit rates, which have no single published per-MWh rate here, so it understates the per-kWh charges that on-site solar removes.

This site's arithmetic on the published rates in NESO, BSUoS charges and NESO, final BSUoS tariffs 2026/27, EMR Settlement, key figures for payment 2026/27, EMR Settlement, Nuclear RAB interim levy rate, October to December 2026, NESO, AAHEDC tariff 2026/27 and HMRC, Climate Change Levy rates. Forecast: West Mercia Energy, 8 October 2025.

Why a sleeved PPA leaves most of these charges in place

A sleeved PPA delivers a solar farm's output over the public network, so the charges attached to grid supply stay on the bill. Respondents to the government's 2026 review of corporate PPAs said non-commodity costs are typically unchanged under sleeved deals. Several asked for exemptions from policy levies, most often the CfD supplier levy, for CPPAs that support new capacity. That is a request, not policy. On-site and private wire supply is the route that takes the per-unit charges off the units it covers.

Source: DBT and DESNZ, corporate PPA call for evidence: government response (7 July 2026).

Energy-intensive businesses: check your exemptions first

Some businesses already pay less of these costs, which shrinks what solar can save on them. The British Industry Supercharger gives eligible energy-intensive industries full exemption from Renewables Obligation, Feed-in Tariff, Contracts for Difference and Capacity Market costs, plus up to 90% compensation for network charges including TNUoS, DUoS and BSUoS. GOV.UK values that support at about £65 to £87 per MWh. The government's July 2026 corporate PPA response also notes that the Network Charging Compensation Scheme discount rose from 60% to 90% in April 2026.

A second scheme, the British Industrial Competitiveness Scheme, is due to exempt eligible manufacturers from the indirect costs of the Renewables Obligation and Feed-in Tariffs from April 2027, and of the Capacity Market from October 2027. If you qualify for either scheme, value an on-site PPA mainly on the energy and the charges you still pay.

Sources: GOV.UK, British Industrial Competitiveness Scheme: guidance for applicants; DBT and DESNZ, corporate PPA call for evidence: government response (7 July 2026).

Questions to ask your supplier

1. Which non-commodity charges are fixed in my contract and which are passed through at cost?
2. Which charges on my bill are per kWh, and which are per site per day or per kVA of capacity?
3. Does my contract let me benefit straight away when my grid imports fall, or only at renewal?
4. If I sleeve a PPA through you, what is the sleeving fee, and which charges stay on top of the PPA price?

For what businesses actually pay per kWh in total, by size band, see business electricity prices per kWh in 2026. How the Climate Change Levy treats each PPA structure is set out on the Climate Change Levy page.

Figures and sources on this page

FAQs

Non-commodity costs: which business electricity charges on-site solar avoids FAQs

What are non-commodity costs?

They are every part of a business electricity price except the wholesale energy: transmission and distribution network charges, balancing costs, policy levies such as the Renewables Obligation and Contracts for Difference, the Capacity Market, and the Climate Change Levy.

Does on-site solar avoid non-commodity costs?

It avoids the ones charged per unit of grid electricity. GOV.UK guidance says behind-the-meter solar is not subject to the Renewables Obligation, Feed-in Tariff and Capacity Market policy costs, and per-MWh charges such as BSUoS fall with your imports. Fixed charges per site, such as the transmission residual, do not.

What is the BSUoS charge in 2026?

NESO's fixed BSUoS tariff is £13.74/MWh for April to September 2026 and £12.49/MWh for October 2026 to March 2027. Since 1 April 2023 it has been charged only to final demand.

What is the CfD levy rate now?

The Contracts for Difference interim levy rate is £5.529/MWh for October to December 2026 and £2.979/MWh for January to March 2027, with a separate operational levy of £0.1463/MWh for 2026/27.

Why don't my network charges fall when I install solar?

Because most of the transmission demand charge, and the distribution residual, are fixed charges per site per day by band, not per kWh. Only the distribution unit-rate element falls with what you import.

Are energy-intensive businesses exempt from these costs?

Eligible energy-intensive industries get full exemption from Renewables Obligation, Feed-in Tariff, CfD and Capacity Market costs under the British Industry Supercharger, plus up to 90% compensation on network charges. The British Industrial Competitiveness Scheme adds exemptions for eligible manufacturers from 2027.