Created: 6th July, 2026
In collaboration with Ginger Energy
School leaders are once again facing significant budgetary pressures as energy costs come under renewed strain following geopolitical instability in the Middle East. While staffing, SEND provision and pupil outcomes rightly remain top priorities, the latest movements in energy markets are creating another challenge that leadership teams in the education sector cannot afford to ignore.
For schools, energy is one of the largest non-staff costs – and unlike other areas of expenditure, it’s not optional. Classrooms must be heated, IT systems must operate around the clock, kitchens must serve meals, and facilities such as sports halls, science laboratories and swimming pools require substantial amounts of energy to function safely and effectively.
Against a backdrop of increasing financial pressure, understanding the factors driving energy costs and knowing how to manage them has never been more important. This is where Ginger Energy’s expertise is invaluable. Ginger is an established and respected energy broker to the education sector and Platinum Partner to Confederation of School Trusts.
The recent conflict involving Iran has increased uncertainty across global energy markets. Iran occupies a strategically important position within global oil and gas supply chains, and any disruption to production, transportation routes or international energy trade can influence wholesale prices worldwide.
Even where the UK does not directly rely on Iranian energy supplies, markets react to perceived risks. As traders price in potential disruption, wholesale gas and electricity prices can rise, affecting energy contracts across all sectors, including education.
The impact on schools will vary depending on when energy contracts were secured and the type of purchasing arrangement in place. Schools with contracts agreed before recent market movements may be protected for now, while those approaching renewal could face significantly different pricing.
Energy market volatility creates challenges on multiple fronts for school leaders.
When wholesale gas and electricity prices increase, schools renewing contracts may face higher unit rates, directly impacting operating budgets.
Schools are required to make staffing, curriculum and operational decisions months in advance. Energy markets, however, can change in a matter of days. This creates difficulties when forecasting expenditure and setting realistic budgets.
Unlike commercial organisations, schools have relatively little flexibility to offset rising costs. Expenditure on staffing, safeguarding, SEND provision, transport, maintenance and other core services is often essential and difficult to reduce without affecting educational delivery. This means that every pound spent on rising utility costs is a pound that cannot be spent on teaching and learning.
The financial impact of current market conditions varies considerably between schools. Key factors include:
Building efficiency is becoming an increasingly important consideration. Schools that have invested in energy-saving technologies, building improvements or carbon reduction measures are often better positioned to absorb market fluctuations.
However, it is equally important to accurately forecast and monitor the financial impact of these initiatives. Without robust data and ongoing review, schools may struggle to identify whether anticipated savings are actually being achieved.
One of the most significant yet least-understood developments in the energy market is the growth of non-commodity costs.
Many school leaders assume energy bills are driven primarily by the amount of gas or electricity consumed. While usage remains important, an increasing proportion of bills now relates to charges that are largely outside a school’s direct control.
These costs can include:
In many cases, these charges have increased substantially and now represent a greater proportion of bills than ever before. This means schools can find themselves paying more even when consumption remains stable or even falls. Just as frustratingly, many price rises apply to standing charge costs, which make them extremely difficult to avoid regardless of a site’s energy efficiency performance.
Firstly, wholesale energy markets remain vulnerable to geopolitical instability, which can push gas and electricity prices upward. And secondly, non-commodity charges continue to rise regardless of wholesale market conditions.
Together, these factors create a situation where schools may experience higher overall energy costs from multiple directions at once. For leadership teams already working within tight financial constraints, this reinforces the need for proactive energy management rather than simply reacting when bills arrive.
Many schools simply assume energy bills are accurate, but billing errors are more common than many leaders realise and can result in unnecessary expenditure over extended periods.
Regular bill validation should form part of every school’s financial management process.
One of the most common causes of inaccurate billing is estimated meter readings.
Look for indicators such as:
Estimated bills can lead to significant overpayments if consumption is lower than the supplier assumes.
Compare the unit rates and standing charges shown on bills against your energy contract.
Mistakes can occur when:
Even small discrepancies can result in substantial costs over a full year.
Standing charges have increased significantly across the market. Check that:
Schools occasionally continue paying standing charges for meters serving buildings or facilities no longer in operation.
Make sure:
Errors within supplier records can lead to schools paying for energy that should be allocated elsewhere.
Most schools benefit from reduced VAT arrangements and exemptions on certain energy supplies. VAT applications made in error can result in overpayments and can be reclaimed. The same is true for an incorrectly applied Climate Change Levy (CCL). Any concerns should be reviewed with finance teams or specialist advisors.
For larger sites, capacity charges can form a significant element of electricity costs.
Schools should ensure they are not paying for excessive agreed capacity that is no longer required. Equally, insufficient capacity can trigger additional charges.
Compare monthly and annual usage patterns by investigating:
These patterns can highlight equipment issues, inefficiencies or building management problems before they become expensive long-term costs.
Today, successful energy management requires more than simply securing a competitive contract.
The most effective schools are connecting three core areas:
Procurement: Developing purchasing strategies that balance risk, market timing and budget certainty.
Energy Efficiency: Reducing consumption through behavioural change, improved controls, building upgrades and ongoing monitoring.
Net Zero Planning: Investing in carbon reduction initiatives that deliver measurable financial as well as environmental benefits.
Too often these activities are treated separately when they should form part of a single integrated strategy.
When procurement decisions, efficiency projects and sustainability objectives work together, schools are better positioned to reduce costs and achieve long-term financial resilience.
Energy markets remain unpredictable, and schools have little control over geopolitical events or rising network costs. What leaders can control is how effectively they procure energy, monitor consumption and validate what they are being charged.
In a period where every budget decision matters, a proactive approach to energy management can help protect valuable resources that are ultimately needed most in the classroom.
For school leadership teams, the question is no longer simply how much energy costs – it is whether every pound being spent on energy is being managed as effectively as possible.
Barker and Ginger Energy are dedicated to helping schools reduce energy costs and operate energy efficiently. Both companies work together under TEEAM, a strategic alliance dedicated to driving the UK’s decarbonisation agenda.
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