By Dan Owen, Flexibility Senior Manager, npower Business Solutions (nBS)
For the warehouse and logistics sector, energy management has officially moved from being a background operations concern to a critical priority. With costs rising and margins tightening, the pressure to control overheads has intensified. That reality is backed by clear data; our latest Business Energy Tracker report found that companies ranked energy as their top operational risk for the fourth year running.
A perfect storm of cost and volatility
Currently, warehouse and logistics operators find themselves exposed to a complex mix of domestic and international cost pressures. Geopolitical instability, particularly in light of the ongoing tensions in the Middle East, is driving volatility into wholesale energy markets, making long-term budgeting more difficult.
Then, closer to home, the UK’s journey towards a clean power system by 2030 is changing how energy bills are structured. To fund the massive infrastructure upgrades required to transport renewable energy – including approximately 5,500 km of new grid capacity over the next five years – businesses are facing steep increases in non-commodity costs.
We forecast that these network, system and policy charges could rise from making up 65% of an average energy invoice to a staggering 76% by 2031. Our industry analysis indicates that average non-commodity charges are on track to rise by over 84% by 2030, while core transmission network charges (TNUoS) have climbed by more than 60% year-on-year.
Considering energy is at the heart of operational spend for large distribution centres, it’s no surprise the sector feels this exposure keenly. And, with the UK’s warehousing footprint consuming huge amounts of electricity, even minor percentage increases in network costs can translate into a big hit on the bottom line.
With all this in mind, buying well and using less is no longer enough – and that’s precisely where energy flexibility comes in.
The energy flexibility edge
In simple terms, energy flexibility is about having the ability to shift electricity use from one time period to another, in response to grid signals and market prices.
As the grid relies more heavily on intermittent renewable generation, balancing national supply and demand becomes more complex. The network frequently experiences capacity constraints, particularly during peak demand hours, but by adjusting their demand during these times, warehouse and logistics companies can support system stability while benefiting commercially as well.
To be clear, flexibility does not allow operators to eliminate rising energy costs or network charges, but it can give businesses the power to influence their final invoice. By reducing power during peak times, they can limit their exposure to certain system charges and participate in demand-side flexibility services, thereby creating a new revenue stream to offset unavoidable non-commodity costs.
Thermal inertia as an asset
The cold storage industry is especially well-positioned to gain from energy flexibility. Keeping goods frozen or chilled requires continuous, power-intensive refrigeration, but these facilities benefit from a built-in advantage with thermal inertia.
These highly insulated cold stores essentially act like giant thermal batteries, holding their temperatures remarkably well. This means operators can deliberately turn down or turn off heavy refrigeration cycles for short periods during peak hours – typically between 4-7pm – without impacting product quality, breaching supplier SLAs or interrupting day-to-day operations.
Beyond refrigeration, the move to electrify fleets opens up new opportunities for flexibility too. As operators introduce electric vehicles (EVs) for short-distance delivery routes, they create highly predictable, depot-based charging demands. Businesses can pause or dial down EV charging during peak periods, using smart charging strategies to protect their margins and support grid resilience – a win-win for everyone.
Innovation in action at Reed Boardall
A prime example of this strategic approach is Reed Boardall, one of the UK’s largest temperature-controlled cold chain businesses. Operating from a huge 55-acre site in Boroughbridge, North Yorkshire, with the capacity to house 168,000 pallets, the family-owned company runs a 24/7 operation that constantly draws heavy power.
Having already optimised its site data visibility through extensive Automated Meter Reading (AMR) technology as well as installing a Combined Heat and Power (CHP) plant, Reed Boardall was an ideal candidate for load shifting. We worked closely with the company to truly understand their on-site assets and release as much value as possible through multiple schemes, whilst ensuring productivity remains a priority.
One of those schemes, which required no productivity impact, was our Demand Shift solution, which enabled them to turn down power consumption during peak hours and sell back a pre-hedged energy volume into short-term markets when prices spiked. Because of their excellent site management, reducing consumption during peak demand windows was achieved with zero impact on the day-to-day operations or the safety of the stored food.
Over the 2024/25 winter period alone, this agile approach generated just under £3,000 in revenue. To build on this success, the business is now exploring a large-scale solar PV installation and AI-based technology to manage flexibility. By stacking multiple services and increasingly linking their productivity schedules to market opportunities, Reed Boardall is set to benefit from considerably higher revenues.
Practical steps to unlock flexibility potential
For warehouse and logistics professionals wondering where to begin, the journey starts with making sure existing infrastructure is working smarter.
First, it’s impossible to manage what you can’t see, so taking control of your data to understand exactly when consumption peaks occur and which specific assets drive the highest demand is essential.
Next, upgrading infrastructure directly impacts your flexible capacity. Improving warehouse door seals, reducing air leakage and maintaining high-quality insulation lowers baseline waste and enhances the built-in advantage of thermal inertia, which is needed to safely shift refrigeration loads.
From there, operators should review day-to-day workflows to see where technical or behavioural adjustments can be made. Simple changes, like scheduling heavy maintenance tasks or automated equipment cycles outside of peak hours, can deliver immediate financial gains.
Finally, navigating flexibility is much easier with expert guidance. Finding the right energy partner means you can establish a robust flexibility strategy that fully respects your specific operational constraints and business needs.
By becoming an active grid participant, warehouse and logistics businesses can effectively protect themselves against rising costs, create vital new revenue streams and guard their bottom line.
Now’s the time to unlock your flexibility potential.
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