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How The Energy Crisis Is Impacting UK Businesses

Phil Foster | Founder & CEO

June 2022

Small Business

We are witnessing unprecedented increases in wholesale energy prices in the UK. We’re now deep into the UK’s energy crisis and things are confusing and expensive.

With so much confusing information around energy, there’s not much useful information about business energy and how the wholesale market has impacted business utility costs.

What Has Caused The Energy Crisis?

The energy market is very complex and there are several reasons why we’re seeing rising energy costs. Each country has varying levels of dependency on gas and electricity from other countries.

The more dependency a country has on another to source energy, the greater mercy it is at when global events interrupt the supply chain. The first instance of pressure was COVID-19 and the lockdowns reduced the overall demand for energy - causing a pullback on gas storage.

As reserved got depleted in the UK (and other countries), there has been an urgent scramble to secure enough gas and electricity to meet demand. Other global and national events have caused wholesale energy prices to surge.

The Business Energy Market

With some energy companies unable to survive and grabbing the headlines over the last 6 months, it has made both businesses and households pay greater attention to their energy bills.

More energy-intensive companies, particularly industrial are seeing the rising costs of energy the most. Overheads are higher than they have ever been and those with the inability to manage operational costs effectively face issues.

Many companies are looking for other alternatives to reduce overheads, particularly other easy-to-manage business utilities such as switching business water, and connectivity packages and even introducing energy efficiency measures to cushion the blow of rising costs.

In a crisis, ongoing issues are often amplified and with many corporate operations adopting a more remote working policy, the demand for office space is placing pressure on building owners.

Is There A Price Cap On Business Energy?

The energy price cap was created to protect UK households, not businesses. As businesses have greater buying power as they typically use larger amounts, they have historically received cheaper rates than UK households.

However, the landscape of business energy is not immune to market activity and many energy suppliers have been passing on increased costs to businesses. This means business owners must be more diligent when managing their business utilities.

Are Business Electricity Rates Cheaper Than Domestic?

Despite the energy crisis, business energy is still much cheaper than domestic energy. Even with the increase in energy prices, businesses still pay a far lower price for their gas and electricity.

However, businesses that have not switched their energy in many years may be paying a much higher price for their energy. If they reach the end of their contract, energy suppliers will automatically place them on out-of-contract rates at a much higher unit rate cost.

Becoming More Energy Efficient

Switching business energy suppliers is only the beginning of managing the costs of energy. Becoming more energy efficient will bring in larger savings. Often hard to implement, it will require getting employees involved to change behavioural habits that could shave £100s each year off your business energy bills.

A simple business energy audit can help you identify improvement areas that you can work on to reduce consumption - you may even be eligible for a free professional energy audit when your switch business energy with us.

Evaluate Other Business Utilities

With energy prices surging, it has become much more difficult to find cheaper business energy tariffs. To balance these costs, other companies are looking to save money on other business utilities.

    • Business Water - Companies based in England and Wales can now switch their business water supplier and are no longer bound by the postcode lottery that determines their supplier. As the market becomes more competitive there are now large savings to be made by switching. You can fix water rates for up to 3 years.
    • Business Broadband - being connected to your customers is essential for any modern business but that doesn’t mean the price should come at a premium. In fact, many companies are still operating on household broadband that is not fit for purpose and does not have the capacity to manage a speedy connection with adequate security when processing customer data.

Compare Business Water 

Compare Business Broadband

Should You Fix Your Business Energy?

It may be hard to get a cheaper business energy deal right now, but it is still worth shopping around for gas and electricity. Many companies are aware that business energy prices could be increasing well into 2023, or even longer.

Compare Energy Deals

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About the author

As CEO of Love Energy Savings, Phil has a strong desire to support UK SMEs making much-needed savings on their energy bills. It was for that very reason that he created Love Energy Savings, to help business owners not only improve their profits through savings but also save valuable time in the process of comparing and switching suppliers.