Time on side: making energy flexibility work for small businesses

“I don’t think there’s enough time in the day, let alone this session, to talk about the issues that I’ve had with energy since lockdown.”
- Alex, Music Business Owner*

For many of the UK’s 5.5 million small business owners, such as Alex, managing energy bills has become a heavy burden. Bills are forecast to remain around 70% higher than pre-2021 levels, and unlike households, small businesses are not protected by the price cap. For many, rising energy costs are now a threat to survival.

But there’s opportunity. Energy flexibility - shifting usage to “off-peak” times when demand is lower - can help reduce costs for businesses while supporting the government’s vision for a cleaner, more resilient energy system. With a working smart meter, businesses can access modern time-of-use tariffs and join schemes that financially reward reduced energy use when the grid is under pressure.

Energy flexibility won’t solve all the immediate challenges faced by small businesses. But for many, it could mean financial savings, greater control, and a role in the net zero transition.

Our research shows 3 main barriers are holding businesses back:

1. A smart meter shortfall

Smart meters form the foundation for modern flexibility offerings, providing the data needed to unlock time-of-use tariffs and other schemes. But recent research shows that over half of small businesses are yet to install one - and many who have aren’t seeing the full benefits.

Although smart meters are designed to allow for more accurate billing and reduce the need for manual or estimated readings, over three-quarters of small businesses with a smart meter report receiving an estimated bill at least occasionally. This can happen when meters fail to communicate properly or when suppliers do not fully utilise the technology. The result: unexpected costs, billing disputes, and frustration that erodes confidence.

Alex had a smart meter installed at his business premises, hoping it would give him more control over his energy usage. But during the COVID-19 lockdown, when his offices were barely being used, his bills stayed stubbornly high.

“It was the first time that we could actually see no usage and what they were charging me — and they were charging me thousands of pounds.”

After 2 years of back-and-forth with his supplier, the problem was finally traced to a faulty smart meter that wasn’t transmitting readings correctly. The experience has left Alex cautious about engaging with the non-domestic energy market in the future.

Improving smart metering standards is essential — not only to unlock energy flexibility, but also to prevent negative experiences discouraging engagement in an evolving energy market.

We’re calling for Ofgem’s Guaranteed Standards of Performance to cover small businesses. The government should also set clear, ambitious rollout targets to drive adoption, particularly in light of previously missed targets.

2. Weakened trust in the energy market

We know the wider non-domestic energy market can also be frustrating for small businesses. Poor customer service, the recent energy price crisis, and complex billing issues have weakened trust.

“For home usage I don’t really mind too much, but for business… nothing’s transparent, nothing is in black and white.”
— Robyn, Chemical Wholesale Distributor

Against this backdrop, navigating contracts and engaging with suppliers can feel complex and time-consuming. This complexity can make new products, like time-of-use tariffs, feel like another risk to manage:

“It seems like they are introducing a way to be able to change your pricing under the guise of it being flexible… The more I see… the more it’s just an excuse for them to put their prices up.”
— Ravi, Director of a Car Parts Manufacturer

For small businesses to feel confident in energy flexibility, the fundamentals of the non-domestic market must function effectively. This means transparent, fair, and accurate billing, supported by reliable customer service.

Ofgem should work with suppliers to strengthen the customer experience for non-domestic consumers and introduce regulatory improvements in billing and complaints handling that build trust and consistency.

3. Practical limitations

Even among the more engaged businesses we spoke to, some viewed energy flexibility as unworkable due to fixed schedules, customer-facing roles, or heavy reliance on electricity.

“Most people [operate] nine to five… if that happens to be peak time, what do you want us to do?”
— Donal, Director of a Cosmetics Manufacturer

“I just don’t know how a business can operate by reducing anything. We rely heavily on electricity.”
— Sofia, Partner in a Real Estate Business

Technologies like battery storage can help, by storing cheaper off-peak energy for use during peak hours. But high upfront costs and uncertain returns make these solutions feel out of reach for many small businesses.

“Yeah, I probably wouldn’t want to invest too heavily in something I don’t know... it’s so new to the market that you want to test it out first.”
— Alex, Music Business Owner

To make energy flexibility work, small businesses may need advice and support tailored to their daily realities.

While statutory advice services for small businesses cover supply-related energy issues, we want these services to be extended to include the flexibility sector.

This should help businesses make informed decisions and ensure that products and services deliver real benefits.

What needs to change

We welcome the Government’s consultation on a new engagement framework for consumer-led flexibility. But without stronger foundations in place, small businesses risk being left behind.

We’re calling for:

• Better smart metering standards — through extending the Guaranteed Standards of Performance to cover small businesses, alongside clear rollout targets for the sector
• Restored trust in suppliers — through stronger regulation of billing and complaints handling
• Tailored advice and support — by extending statutory advice services to cover the flexibility sector

Energy flexibility isn’t just about supporting the move to cleaner energy — it’s about creating a system that supports growth, builds resilience, and works for everyone, including the small businesses that are the backbone of our economy.

*Quotes taken from research conducted by Citizens Advice and Spark Insight (March — April 2025). Workshops were held with micro and small businesses that do not currently use energy flexibility. Names have been changed to protect the participants’ identity.