How to Minimise the Impact of Rising Energy Prices on Your Business

Anyone who’s watched the news in the last few weeks will know that energy prices are rising. As well as posing issues for domestic customers and energy companies themselves, the impact could be disastrous for businesses across the UK.

In this post, we’ll take a closer look at why exactly energy prices are on the up and how businesses can become more efficient to reduce the impact on their bottom line.

Why are prices rising?

The problem with gas isn’t restricted to the UK alone. It stems from a global shortage in gas and other energy supplies, which has seen wholesale gas prices rise by 250% since January 2021. Put simply, that means energy suppliers are having to pay more for the gas which they provide to end users – including both homes and businesses.

As with any product, a hike in the cost of raw materials usually means a higher price for customers. That’s exactly what’s happening with energy bills. As outlined by Ofgem, your bill is made up of:

• Wholesale costs
• Network costs (pipes and wires)
• Operating costs (billing and metering)
• Environmental schemes
• VAT
• Supplier profit

While there are several different elements to your bill, wholesale costs typically account for over 40% of the overall price. That could have been offset slightly by a cut in VAT, which contributes around 5% of the cost, but the government decided against it in their October budget.

Reducing your energy bills

In a stable energy market, you’ll be well aware of the normal advice of switching providers. That usually gives you a better price for the energy you use, resulting in lower bills.

Unfortunately, that’s not the case for the foreseeable future. With the supply crisis ongoing, most companies aren’t offering fixed deals. Those who are offering them have bumped up prices to cover a worst-case scenario – where wholesale energy prices don’t come back down.

Instead, the best advice, for both businesses and households, is to reduce the energy you use. For homes, this means turning down the thermostat, switching to energy efficient bulbs or appliances and using washing machines and dishwashers less.

For businesses, things are a little more complicated. Commercial LED lighting is one simple fix you can use to reduce your electricity usage. However, the most substantial way to reduce energy use is through the Energy Saving Opportunity Scheme (ESOS) and Streamlined Energy and Carbon Reporting (SECR).

Mandatory for large undertakings, these government-led schemes require you to assess and report on your energy consumption with a view to reducing your output wherever possible. With the right insight on your side, you can make them work for your bottom line as well as the environment.

Need a hand reducing your energy use?

At Volta Compliance, we make it easier for organisations across Yorkshire to decrease their energy consumption and keep their bills as low as possible. Our expert team can deploy a cloud-based solution to gather your energy data, allowing us to make recommendations to reduce your output (and bills) going forward.

To arrange a site visit or talk more about our services, simply call us on 0113 436 0402 or email [email protected].