SMEs face growing ‘energy literacy’ gap as jargon clouds cost control

New research from Valda Energy has found that UK small and medium-sized enterprises are struggling to understand the terminology behind their energy bills, with more than half of those surveyed showing low levels of what the company calls “energy literacy.”

As the government prepares new regulatory changes, including revised Transmission Network Use of System (TNUoS) charges due in April 2026, many small businesses report feeling overwhelmed by shifting costs, complex tariffs, and unclear terms. The findings suggest that misunderstanding the basics could now be compounding the impact of rising prices.

According to Ofgem’s 2025 report, one in seven UK businesses does not fully understand what makes up its energy bill. Among those with lower energy literacy, representing 53% of Valda Energy’s sample, there was a higher likelihood of payment difficulties.

“Business owners are continually exposed to a barrage of media discussions, from changes to ‘TNUoS charges’ or ‘Net Zero targets,’ and it’s not always obvious what those mean for day-to-day operations or the bottom line,” said Daljeet Kaur, chief operating officer at Valda Energy.

The company’s research also found that 37% of microbusinesses believe business energy contracts follow the same terms and conditions as domestic energy — an assumption that can lead to higher costs or unsuitable tariffs.

Valda Energy analysed more than 75,000 online and social media posts to identify the terms that cause the most confusion. The kilowatt-hour, or kWh, ranked top, appearing in nearly 3,000 posts where users sought clarification. Many were unclear about the difference between kilowatt, which measures capacity, and kilowatt-hour, which measures consumption.

Other commonly misunderstood terms included heat pumps, green energy, and energy price cap, with many business owners assuming that the cap applied to commercial tariffs. For smaller enterprises, unclear language can quickly translate into financial risk — from overpaying for supply to signing unsuitable long-term contracts.

“Our research consistently shows that unclear terminology isn’t a minor issue; it directly affects how small businesses manage and plan their daily operations,” said Kaur.

In response, Valda Energy has launched an online SME Energy Glossary designed to explain key energy terms in plain English and help business owners interpret regulatory and billing information more accurately. The company said improving energy literacy can strengthen cost control and decision-making at a time when many SMEs face tightening margins and volatile wholesale markets.