Key Takeaways
- UKUAT has raised concerns over a planned 94% increase in electricity network standing charges from April 2026.
- The changes could significantly impact glasshouses and vertical farms across the UK.
- The sector remains excluded from the Energy Intensive Industries (EII) exemption scheme despite high energy demand.
- Higher electricity costs risk reducing domestic food production and increasing consumer prices.
- Industry bodies are calling for urgent policy updates to include CEA and vertical farming in energy relief schemes.
UKUAT Highlights Rising Energy Costs Across Controlled Environment Agriculture
UK Urban AgriTech (UKUAT) has issued a warning over the impact of a planned 94% increase in electricity network standing charges scheduled to take effect in April 2026. According to the organization, the proposed changes pose a significant financial risk to the UK’s controlled environment agriculture (CEA) sector, including both protected horticulture and vertical farming operations.
The revised charges are calculated based on grid connection capacity rather than actual electricity consumption. This structure means that businesses with high-capacity connections—common in glasshouses and vertical farms—could face substantial additional costs regardless of usage levels.
UKUAT Flags Risks for Vertical Farms and Glasshouse Operators
Standing Charges Based on Capacity, Not Consumption
UKUAT notes that vertical farms are particularly exposed due to their reliance on high-capacity electrical infrastructure for lighting, climate control, and automation. Larger operators could face very large cost increases, while smaller vertical farms, often operating with limited margins, may struggle to remain viable.
The planned changes are also expected to deter future investment in new vertical farming projects, as reduced margins and higher fixed costs increase financial risk for developers and investors.
Exclusion From EII Relief Remains a Key Concern for UKUAT
Policy Classification Limits Access to Support
A central issue identified by UKUAT is the sector’s exclusion from the Energy Intensive Industries (EII) exemption scheme. While many manufacturing sectors receive up to a 90% discount on certain energy costs, CEA and vertical farming remain ineligible due to outdated Standard Industrial Classification (SIC) codes.
UKUAT points out that the energy intensity of the sector is comparable to industries already receiving relief. The UK government has previously acknowledged this by including vertical farming and CEA in the Industrial Energy Transformation Fund in 2023, yet eligibility for EII relief has not been updated accordingly.
Competitive Pressure and Financial Impact on UK Growers
UK electricity prices remain among the highest in Europe. Industrial electricity prices in the UK are reported at around £56/MWh, compared with £34–£38/MWh in countries such as the Netherlands and Belgium. UKUAT states that this gap places domestic growers at a competitive disadvantage.
For some large glasshouse operators, the increased standing charges could add close to £1 million annually to operating costs. Vertical farms with high-capacity grid connections for LED lighting and HVAC systems face similarly unsustainable increases.
“For the controlled environment agriculture sector, a near-doubling of standing charges is simply not absorbable,” said Dr Paul Myers, Managing Director at Farm Urban and Non-Executive Director at UKUAT. He added that failure to include horticulture in the EII scheme risks undermining domestic food production.
Broader Economic and Consumer Implications
UKUAT warns that without intervention, the consequences will extend beyond growers. Higher production costs are likely to be passed on to consumers, adding pressure during an ongoing cost-of-living crisis. Reduced competitiveness may lead to business closures, lower investment, and increased reliance on imported produce.
The sector currently supports more than £250 million in annual crop value for tomatoes, cucumbers, and peppers and sustains over 3,000 jobs. Many CEA sites also contribute to energy resilience through Combined Heat and Power systems that export electricity back to the grid.
UKUAT Calls for Policy Update to Protect Domestic Food Production
UKUAT, alongside other industry bodies, is calling for an update to EII eligibility rules to include controlled environment agriculture, protected horticulture, and vertical farming. According to the organization, the energy-intensive nature of the sector is well established, and the precedent for government recognition already exists.
“Without urgent action, UK food production is at risk, and consumers will continue to feel the impact at the tills,” stated representatives from the British Tomato Growers Association and the Cucumber and Pepper Growers Association.
UKUAT argues that timely policy adjustments could provide a critical lifeline for growers while supporting food security, innovation, and the UK’s broader energy and climate objectives.
