According to energy analysts Cornwall Insight, UK business will see their energy bills rocket further when new contracts are negotiated from October. Some are expected to face bills five times their current level, as concerns over Russian gas supply and tight electricity markets cause wholesale prices to spike.
Business energy prices have already been increasing at a proportionately higher rate than households over the last year. There are now serious concerns that energy costs could result in widespread business closures, particularly in sectors where profitability is most exposed to cost increases such as hospitality, leisure, retail and manufacturing, Cornwall Insight said.
“Logic dictates that there can only be so long that so many businesses can pay so much more for their energy without knock-on consequences for themselves, their suppliers, and the wider economy,” explained Robert Buckley, head of relationship development.
“If we at Cornwall Insight are correct there will be no return to 2020-21 wholesale prices before 2030. We are simply not having the essential conversations in Great Britain on relief for, or of, structured energy savings from businesses. We must ask ourselves whether we should be following the example of countries such as Germany, who are talking about the potential for rationing energy and taking energy savings measures now.”
Research shows that interest in energy efficiency is growing in the most affected sectors. According to one survey of businesses in the hospitality and leisure sector – where 1 in 4 bosses are now considering closing in the next year due to energy costs – 94 per cent believe they are wasting more than a fifth of their energy.
The survey shows that demand for energy efficiency solutions, from installing LED lighting to using energy analytics to identify inefficient machinery or drive positive behavioural change, has jumped.
More than a third (36 per cent) of business owners said they had invested in energy efficiency measures, with a further 43 per cent intending to do so within the next 12 months. Nearly half (44 per cent) also said they will explore installing their own renewable energy generation on-site.
Harvey Sinclair, CEO of eEnergy, which commissioned the research, said: “This survey shows UK businesses appreciate the scale of the challenge faced. We must all now work together to make better use of the affordable solutions that are readily available to overcome today’s challenges and put the UK back on track to reach net zero; from cutting energy waste to installing solar panels and EV chargers. This is good for profits and jobs, good for the planet, and it’s all possible without upfront costs or taxpayer support.”
A similar shift is underway in the manufacturing sector, according to a recent report by Siemens and manufacturers’ organisation Make UK. Around 8 in 10 of the manufacturers surveyed in the report said decarbonising their operations is now a priority, with 52 per cent citing the rising cost of energy as the main driver.
Over half said they already measure their energy consumption, and three quarters are planning to speed up their energy saving efforts. Around two in five also said installing on-site renewable electricity or heat is their main concern.
