Energy prices are set to rise from 1st October — that’s less than 5 days away. It’s all over the news and many businesses are worried about the coming winter months. Between recent shortages in consumer spending and staffing, rising energy costs is hardly welcome news.
If this wasn’t bad enough, there’s speculation that consumers face dwindling options to avoid the price hikes as they switch business energy suppliers. Industry experts forecast a cull in the supplier market as consumers consolidate from 70 suppliers to as little as 10 by the end of this year.
So what can you do? If you’re keen to learn some commercial energy saving tips, you’re in the right place. Read on to find ways to save money using our practical steps to use your energy more efficiently, switch business energy suppliers easily, and access support to help you meet rising costs.
We’ll start by explaining why prices are rising so you know which red flags to look for in suppliers before delving into our top tips for business energy savings.
What’s making business energy supply more expensive?
Will the price cap protect me?
Practical commercial energy saving tips for your business
Why are business energy suppliers charging more?
Like most of life’s problems recently, there’s something of a ‘perfect storm’ brewing. The latest data shows that it’s not a shortage issue. Both Kwasi Kwarteng, Business and Energy Secretary, and Jonathan Brearley, Ofgem chief executive, are confident that the UK won’t face outages from energy not reaching customers. Instead, it’s the price of delivering it that’s increasing.
Overwhelmingly contributing to this price increase is the rising cost of wholesale gas and electricity (the green bar below). The UK imported more gas than ever before this year, and this trend is expected to continue as the weather gets colder.
However, price increases are being felt sharper than normal. This is because many businesses are still struggling as the UK emerges from the COVID-19 pandemic, and rising inflation means expense increases make the burden heavier. All in all, UK energy consumers are facing around a £140-150 price increase — on top of the £230 increase from earlier this year.
Will the price cap protect me?
Yes and no. The price cap is only relevant to you if you use the default tariff (standard variable tariff or SVT). For example, if you haven’t renewed your contract in a while or have recently come off a deal and haven’t changed to a new one yet.
The price cap isn’t a fixed limit that energy companies can charge their customers. Instead, customers using capped energy tariffs have their price rises capped. Therefore, even if you’re on a capped energy tariff, because the wholesale price of energy is increasing globally and that the wholesale price accounts for around 40% of the price cap framework (see the bar graph above), you may still be affected by the rising costs.
Practical commercial energy saving tips for your business
What can businesses do then? Well, our commercial energy saving tips are broken down into three areas. We’ll walk you through each so you have a clear understanding in the time you’ve got left to switch business energy suppliers and make your business more efficient.
Easy business energy savings: Make your business more energy-efficient
Price hikes or no price hikes, finding ways to make your business more energy-efficient is useful advice at any time of the year. Inefficient energy usage can make a cheap plan expensive quickly. While heating is the more obvious culprit, lighting and electricity usage also occupies a considerable portion of your bills, so take a comprehensive overview of your energy usage and save money where you can. The Carbon Trust has a useful checklist for businesses looking to save energy.
Whether you’re looking to keep heat in or out, finding ways to stabilise air flows within your business’ premises can help avoid temperature extremes in either direction. Obvious examples include using draught excluders and a thermostat, however, even rearranging your furniture can help you reduce costs. You can heat the surrounding air more efficiently and enjoy the warmth directly by moving furniture away from radiators.
Similarly, once the heat is in the room, don’t let it escape. Effective insulation can help you avoid wasting energy and save money by letting you feel the heat and not the brickwork. By improving your walls, windows, roof and floors, you could save hundreds of pounds a year collectively.
Lights and power
Every energy-saving guide mentions them: LED bulbs are a more efficient way of lighting your businesses. Although incandescent bulbs have a cool and ever-more retro look to them, they’re terrible from an energy perspective as only 5% of the energy input is turned into light. If your business aesthetic needs an orange glow, consider where you can supplement it with LED versions. This small switch alone could save you around £30 a year.
Similarly, switching off devices like computers, TVs, or kitchen appliances when not in use can help you limit wasted energy usage. For example, during quieter mid-week periods, you could switch on one POS till only or turn off empty fridges.
Similarly, even though many modern devices stop draining power when their batteries are full (during overnight charging, for example), they continue to operate — drip-feeding small amounts of charging power. Therefore, taking them off completely and charging the remaining 2-3% at the start of the day can help you save money. And if in doubt, if it’s not essential like servers or freezers, switch it all off at COB until the next day.
Finally, if you haven’t already, using a smart meter can give you more transparency on your energy usage and bills. Not only can you start making real-time savings when your usage spikes, but you can also start budgeting to the penny and improve your cash flow with the newly available funds.
Are you planning on buying new equipment?
If you’re replacing equipment or expanding your operations, you can check GOV.UK’s Energy Technology List. It provides independently verified energy-efficient products like boilers, lighting, air conditioning and refrigeration equipment so you can plan with sustainable long-term energy savings in mind.
Switch business energy supplier
If you’re coming to the end of your contract and you’re looking to switch suppliers, how can you save money? Nowadays, many customers find they need to consult price comparison sites to find the best deals — even if it’s to stay with their existing supplier.
Make sure you’re within your contract’s allowed exit period when switching. Ofgem data shows that business switches can take up to 21 days to complete, so aim to change your supplier within your existing contract’s cancellation period. Otherwise, you’ll be charged exit fees or risk rolling onto the same default tariff that’s rising.
How to find the top business energy suppliers
When comparing different suppliers, try to consider the following:
Find a flexible tariff that you’re not strictly tied to. Changing deals when it suits you and avoiding fixed costs means you control your energy costs better.
Use an environmentally-friendly tariff. Off-setting your carbon means less extreme weather and energy usage in future.
Find the cheapest tariff available to you. Balancing a cheap rate versus a reliable provider is difficult right now. With energy providers struggling to stay afloat, the cheapest rate may be unsustainable, so paying slightly more for a larger supplier may mean you can lock in your plan for the foreseeable future.
As you’re looking to make the switch, use FreePriceCompare.com. We’re a UK-based comparison service providing price comparison solutions for the home and business energy market. We’re completely FREE, INDEPENDENT and IMPARTIAL, ensuring you find a cheaper price no matter what you’re searching for.
Right now, we’re offering a price guarantee for businesses — we’ll beat your initial renewal energy quote or give you £1000 cashback.
Bridge the price gap with grants and funding support
Businesses are eligible for grants and other support packages to help them meet their energy costs or upgrade their equipment and furnishings. Grants and support packages are available through different channels, so make sure your business meets the necessary criteria for any that you apply to.
From the UK Government
The UK government has a wide range of support available, including loans, grants and subsidies, helping businesses to meet the costs of installing insulation, buying low-carbon equipment or managing or reducing their waste materials and water. Depending on the exact programme your business qualifies for, you could have the costs covered entirely or partially. Find out more on the GOV.UK business finance and support portal.
If your business has a physical location like a warehouse or office, you could even get paid to generate your own renewable power and heat through the national Smart Export Guarantee scheme. The programme works by enabling businesses to install green infrastructure like solar panels or wind turbines. In turn, businesses get paid to export this energy back into the national grid and reduce their energy bills. If it’s a particularly sunny or windy day, you might even make some money rather than offset your own usage.
Further legislation is planned to help support businesses in the energy transition and reduce costs as the UK government continues its strategy to meet its 2035 Net Zero target. These include a Clean Heat Grant and Green Gas Support Scheme, helping to make more sustainable fuel sources and equipment accessible to small businesses. Keep an eye out for these programmes going live and find out whether your business is eligible.
From your local council or environmental charity
Local council authorities have schemes available aimed at helping promote greener small businesses growth. Find your local council and ask what sort of measures or funding they can provide. You may even be able to pair different funding sources by applying for business innovation funding and integrating other social and environmental projects.
Organisations and charities like The Carbon Trust work with businesses to help them identify ways they can be greener and more energy-efficient. Research local environmental and sustainability groups in your area for further support and guidance, or search online funding sources like Grants Online.
From your energy company
Some energy companies offer small business support through energy-efficiency schemes or grants. If you’re struggling to pay your bills, speak to your supplier and find out how much they’re able to cover. As before with government and charity programmes, the eligibility criteria will vary with each supplier and may depend on your business’ size, location and sector.
Finally, you may be able to spread the cost of your bills better by building up credit with your supplier if your cash flow is seasonal. Speak to your accountant or supplier and figure out how to spread the cost of your energy through pre-payments when your revenue allows it.
Read more from Free Price Compare on similar topics and find a good deal this winter.