Energy usage prices have been rising at an unprecedented rate since 2021. The unusually cold European winters in 2020-21 caused a squeeze on the global energy supply. More recently, the war in Ukraine has created limits on Russian exports of gas, only exacerbating the issue. Although all businesses are being affected, small and medium-sized businesses (SMEs) have faced an average gas bill hike of more than 250% in the past year, according to research by energy analysis company Cornwall Insight.
Furthermore, with inflation at an all-time high for individuals as well as companies, it’s difficult for organisations to pass along business cost increases to consumers to mitigate expenses. Consequently, 30% of small business owners will have to reduce their energy usage to save on costs, according to research by financial technology company Iwoca. To help ensure rising energy prices don’t negatively impact business growth, organisations may wish to consider ways to lessen the impact. Consider these tips:
- Find the best energy deal. The commercial energy market is competitive, and suppliers are typically keen to increase their customer base, so it always pays to shop around. Now might be a good time to consider “going green” by examining green energy deals that may be both cost-effective and beneficial to the planet. The government has allocated approximately £5 billion in funding to help UK businesses become greener.
- Install a smart meter. Taking infrequent meter readings can make it harder to evaluate energy usage. By installing a smart meter, energy usage can be monitored throughout the day, which is helpful for spotting energy-heavy processes.
- Implement energy efficiency measures. Review current energy efficiency measures to spot any necessary improvements that could reduce energy usage. Such improvements may include switching off equipment at the end of the day, switching to LED lightbulbs, and minimising heat loss by draught-proofing and using proper insulation. Additionally, consider implementing a hybrid work model—allowing staff to work from home or elsewhere some of the time—to help save on costs.
The rise in energy costs has caused significant worry for many UK businesses. While raising prices is one way to offset the impact of energy costs, it’s important for organisations to consider alternative measures while the cost-of-living crisis persists. For additional risk management guidance, contact us today.