UK businesses are still facing record electricity costs, with supermarkets among the hardest hit. Despite a 7% drop in the household price cap in July 2025, non-domestic electricity prices have continued to climb, rising 6.4% year-on-year. With energy representing a significant operating cost, particularly for retailers with large property portfolios, the need for a new approach to electricity procurement is becoming increasingly urgent.
Supermarkets are inherently energy intensive. Their demand profile is shaped by around-the-clock refrigeration, HVAC systems, lighting, and a growing need for EV charging infrastructure. These systems are essential, but they also make energy a major cost. The volatility of grid electricity price, driven by geopolitical instability, fuel supply constraints, and network bottlenecks, adds further pressure.
In this context, Power Purchase Agreements (PPAs) are emerging as a viable route to greater control over energy costs and emissions. While traditional PPAs provide fixed or indexed pricing from off-site generators, behind-the-meter PPAs go further by delivering power directly to a site and bypassing the grid entirely, writes Phil Thompson, CEO of Balance Power.
What are Behind-the-Meter PPAs?
A behind-the-meter PPA is a long-term agreement where a business consumes electricity generated on-site, such as from a solar array or local battery system installed at or near the premises. The energy generated does not enter the national grid but is used directly by the business, avoiding network charges, grid losses, and third-party markups.
For supermarkets, this model offers both economic and operational advantages. It reduces exposure to wholesale market volatility and avoids additional levies, such as the Climate Change Levy and Balancing Services Use of System (BSUoS) charges. As the electricity is generated and consumed locally, it also allows for greater certainty in supply and stronger alignment with decarbonisation goals.
Despite these benefits, uptake has been gradual. Grid delays, complex planning processes, and internal decision-making hurdles have slowed wider adoption. Yet, as grid congestion worsens and the timeline for new connections stretches, more retailers are beginning to reassess the viability of on-site generation and direct wire arrangements.
Systemic Barriers to Energy Procurement
The Clean Power 2030 (CP30) Action Plan acknowledges the urgent need to reform how energy infrastructure projects are approved and connected. But local planning bottlenecks persist, and supermarkets are not exempt from the impact. Many projects, even small-scale solar installations, face extended wait times for permission, grid studies, or connection offers.
The disconnect between national clean energy goals and local planning enforcement has made the process unpredictable. For businesses looking to install generation assets on distribution centre rooftops, or adjacent land plots, the lack of clarity can delay investment decisions by months or even years.
In parallel, the national grid is nearing capacity. The Climate Change Committee’s 2024 Progress Report highlights how new generation projects, especially larger installations, face lengthy waits for grid access, driving up costs and uncertainty. In this environment, decentralised solutions like behind-the-meter PPAs offer a practical workaround.
Case for Retail-Led Decentralisation
Retailers, especially supermarkets with large footprints and predictable energy demand, are in a strong position to adopt behind-the-meter solutions. The infrastructure required, such as rooftop solar, on-site batteries, and local energy storage, can be integrated with minimal disruption to operations.
This model is already being trialled by several major UK supermarket chains, such as Tesco, Iceland, and Sainsbury’s, who are partnering with developers to deploy systems on their warehouses, logistics hubs, and in some cases, at store level. These projects allow them to consume self-generated renewable energy in real time, reducing Scope 2 emissions and improving energy resilience.
While not all sites are suitable for on-site generation due to space, orientation, or grid constraints, a portfolio approach allows supermarkets to optimise generation across multiple locations. Direct wire extensions, where power is generated off-site but still delivered without entering the grid, can supplement generation in denser urban locations where space is limited.
Companies like Balance Power support this transition by helping retailers assess site suitability, develop multi-site strategies, and deliver decentralised energy systems that are cost-effective, scalable, and aligned with net-zero goals. For retailers under pressure to cut costs and decarbonise their operations, this service can offer a practical and increasingly essential solution to better future-proof their energy supply.
Planning Alignment and Policy Gaps
Despite technical feasibility, regulatory and planning hurdles remain. Local authorities often lack the capacity or mandate to fast-track renewable energy projects, even where they align with national decarbonisation targets. Planning approval for energy infrastructure can exceed 12 months, far beyond the four-month statutory guidance.
There is also a lack of consistent criteria for evaluating proposals. Without clearer guidance from national bodies, local authorities often apply outdated or overly cautious interpretations of planning policy. Updating the National Planning Policy Framework to explicitly prioritise renewable installations at commercial sites could reduce friction and accelerate the adoption of behind-the-meter PPAs.
Likewise, coordination between national and local stakeholders is essential. Regional energy task forces could align grid development plans with commercial needs and help standardise planning practices. This would improve visibility, reduce developer risk, and accelerate the rollout of behind-the-meter infrastructure.
The Opportunity Ahead
As supermarkets seek to reduce emissions and meet internal net-zero targets, the potential of decentralised, locally consumed renewable energy remains largely untapped. Behind-the-meter PPAs provide a practical, commercially viable way to transition from grid dependency to energy autonomy, while mitigating exposure to volatile prices.
However, broader adoption will depend on three factors: better planning coordination, streamlined regulatory processes, and clear commercial models that account for the unique operating constraints of food retail. Retailers cannot solve these challenges alone, but they can signal demand, shape policy, and lead by example.
Supermarkets, retailers, and convenience stores are a central driver of the UK’s economy, with 39 pence of every pound spent going to food shops. How we respond to rising energy costs will be a litmus test for how other sectors are able to future-proof and align themselves with the UK’s push for net zero.
Therefore, the decision to invest in on-site generation and pursue behind-the-meter PPAs is not just a sustainability initiative – it is the practical measure, one that will define the sector’s energy landscape in the years ahead.
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