The UK is currently experiencing soaring energy costs, with prices rising further from this month when industry regulator Ofgem increases the price cap on energy bills by 54%, and another significant rise is expected in October.
Commercial energy providers will inevitably pass increasing energy costs onto their business customers, so what can SME firms do if they’re struggling to pay their commercial energy bills?
Why are commercial energy prices rising?
Several factors have contributed to rising energy prices, including higher global demand and lower solar and wind energy output.
Dermot Nolan, former Ofgem chief executive, said the increases were exacerbated by depleted stocks following a cold winter last winter, reduced supply from Russia, and increased demand for liquefied natural gas from the Far East.
Previously, Ofgem’s energy price cap had prevented energy companies from passing these price increases on to customers. However, the new cap in April means that average energy bills will increase by £693 from £1,277 to £1,971 per year for households alone.
How is this affecting SME businesses?
Research from Tyl by NatWest confirms that commercial energy costs are mounting. As of September 2021, 54% of businesses spent £3,000 or more on annual energy bills and a small number of businesses (2%) are paying more than £5,000 a year on energy bills alone.
70% of SME business owners surveyed said that rising energy bills are impacting the growth of their business.
What support is available for small businesses?
Commercial energy providers
Ofgem advises businesses who are worried about paying their energy bills to contact their energy supplier as the first port of call. Providers may be able to offer their business customers a payment plan, payment break or reduction, or access to hardship funds.
Business finance schemes and grants
Your commercial energy provider may also be able to offer a business grant or scheme to help you improve your business energy efficiency. These could include subsidies on the upfront costs for more energy-efficient equipment.
Government and regional schemes
The UK government offers a business finance and support finder function to search for all grant and loan schemes available for businesses looking to reduce their energy bills across the UK.
This list will update throughout the year as different local authorities secure and distribute funding, so it’s worth checking regularly to see if your local area offers new business support schemes in the future.
East Sussex currently allows local SMEs to apply for up to £1,000 for energy efficiency projects to help businesses reduce their commercial energy bills, and Zero Waste Scotland offers an interest-free loan of up to £100,000 to install energy-efficient lighting, heating and insulation which can help to lower energy costs.
Ofgem also recommends that SMEs contact their local council about small business support funding, including sustainable business growth grants.
Energy efficiency improvements
Our previous blog outlines a series of ways businesses can reduce their commercial energy consumption.
Having a smart meter installed can save businesses around 10% on their annual fuel bills and improving the efficiency of heating systems, insulation, and even switching to energy-saving lightbulbs can make a big difference.
Optimise your business energy consumption with Enexus
Enexus Energy provides businesses with bespoke strategies to optimise the purchase and use of commercial energy.
We can help firms take proactive measures to lower their business energy outgoings, reduce consumption, and guide you to lasting savings on your energy costs.
To see how we can help, please get in touch:
Tel: 01253 966 960