It’s a difficult time to be in business right now, with a range of challenges that include skills shortages, spiralling material costs, the post-pandemic recovery and the changeable nature of Westminster politics.
The ongoing energy crisis is making the situation worse, so in this blog we’ll explore:
The impact of the energy crisis on businesses.
What government support is available towards energy costs.
Ways to improve energy use at your business.
What’s the impact of the energy crisis on businesses, and will the outlook get worse before it gets better?
Soaring energy costs have forced a record number of firms out of business.
Energy prices are not forecast to significantly fall any time soon. The upcoming Energy Bills Discount Scheme will provide less support to smaller businesses. Instead, it will focus on helping industries that use a lot of energy.
This means the outlook for smaller businesses may get worse before it gets better.
What government support is there for business energy bills?
The UK Government is currently subsidising electricity and gas prices for businesses, charities and local authorities through the Energy Bill Relief Scheme. This runs between October 2022 and March 2023 and covers Great Britain and Northern Ireland.
Providing £18bn in support, the scheme applies to fixed contracts agreed on or after 1 April 2022, as well as deemed, variable and flexible tariffs or contracts.
Prices are currently set at:
£211 per megawatt hour (MWh) for electricity
£75 per MWh for gas
When the Energy Bill Relief Scheme was put in place, wholesale energy costs in England and Wales were expected to reach £600 per MWh for electricity and £180 per MWh for gas. This government intervention has been a lifeline for struggling businesses.
The Energy Bills Discount Scheme
The UK Government recently announced the new Energy Bills Discount Scheme for businesses. This runs from April 2023 to March 2024 and replaces the Energy Bill Relief Scheme.
What discounts are available under the Energy Bills Discount Scheme?
Non-domestic energy customers, including businesses, schools and charities, get a discount of:
£6.97 per MWh for gas
£19.61 per MWh for electricity
Energy suppliers will give this discount to customers directly, so if your business is eligible, you don’t need to apply for the scheme. This is a discount on wholesale prices rather than a fixed price.
If your business has energy costs below £107 per MWh for gas and £302 per MWh for electricity, you won’t get support under this scheme.
Discounts for energy and trade intensive businesses
There’s a larger discount for energy and trade intensive businesses with high energy use. This is because these types of businesses are unlikely to be able to pass on these extra costs to their customers.
This discount will only apply to 70% of the energy a business uses. There will be a maximum discount of:
£40 per MWh for gas
£89.1 per MWh for electricity
The threshold price, which is the price when the discount will be applied to these energy intensive businesses, will be:
£99 per MWh for gas
£185 per MWh for electricity
How can I help my business combat the rising cost of energy?
There are several ways you can help your business to save energy and money.
Improve energy efficiency in the workplace
According to research from the Department of Energy & Climate Change, the average small and medium size enterprise (SME) could reduce energy bills by 18-25% by installing energy efficiency measures and changing behaviour around energy use. This is especially true for offices and retail spaces.
You can motivate your employees to save energy at work and at home by giving them the knowledge they need to create a culture of sustainable behaviour in the workplace.
You can get practical energy saving advice for your employees from the different workshops and training sessions that we offer.
What’s needed to help businesses in the future?
Businesses need more cohesive policy and more support during the energy crisis so that they can manage their energy use. Reducing a business’s energy use can help to bring down energy bills and also reduce carbon emissions, which can also help accelerate the UK’s drive towards net zero.
There are some glimmers of hope about the wholesale cost of energy coming down this year, but bills will remain high for some time to come.
