Rising Energy Costs for UK Businesses

POWWR, a leading energy software provider, has released its latest Quarterly Energy Barometer Report, revealing a significant rise in annual energy costs for UK businesses. The report outlines that the average annual electricity bill has risen by 5.5%, from £5,160 to £5,446 per annum.

The report is based on almost 400,000 data points, and covers a variety of businesses, from boutique start-ups to large industrial and commercial organisations. As such, it provides unprecedented insight into how much energy UK businesses are consuming, and what they are paying for it.

In this article, we explore the key trends identified in the report, including the significant regional price differences across the UK, the surprising increase in energy consumption, and the growing preference for long-term contracts.

Regional Pricing Differences

The average cost of energy rose across the majority of regions of the UK during the last quarter. The biggest rises, however, were seen in North East England (13%), East England (11%) and East Midlands (10%). The only regions to see a decrease in energy bills were North Wales (-7%), South West England (-4%), and West Midlands (-2%).

Businesses in London now have the lowest annual energy bill in the UK, paying an average of £4,626 for electricity per annum. Despite a reduction in their bills in the last quarter, those in North Wales pay 36% more than their counterparts in London, paying an average of £6,293 per annum for their electricity.

Increasing Energy Consumption

The report shows that despite increased environmental awareness and businesses wanting to reduce their spending, energy use has actually increased this quarter by 4.1%. This is rare, as we usually expect to see businesses decrease their energy usage during the summer months, due to a mixture of holidays and better weather.

The average UK business now consumes almost 24,000 kWh of energy a year. This total is mainly driven by very large businesses that use over 100,000 kWh a year, whose energy usage has increased by over 4,000 kWh quarter on quarter. Despite the rise, the average of 24,000 kWh is, though, 11% less than the same period last year.

Long-Term Contracts

The average energy contract length UK businesses are committing to has remained constant quarter on quarter at 25 months. Locking in longer contracts is, though, particularly popular among smaller and medium sized businesses as they look for price certainty during a period of sustained instability in the energy market.

There is little variation on the average contact term agreed by businesses within different regions of the UK, with it being between 24 and 26 months throughout the UK. Most contracts have remained at the same length as last quarter or slightly increased. The only exception being to decrease from 25 to 24 months in London.

Supplier Switching Opportunities

One of the major findings from POWWR’s report is that businesses of nearly all sizes pay more when they renew as opposed to if they switch supplier. Their research shows that very large businesses pay 15.6% more on average when they renew, indicating that it pays to use an energy broker to shop around.

It highlights that some UK businesses are missing out on savings opportunities, with research outlining that businesses would typically save 6% by switching energy supplier. The only size of businesses that appear to have been rewarded with staying with their existing supplier are small businesses, who are paying 3.4% less to renew than switch.

Final Thoughts

The POWWR Energy Barometer Report highlights challenges for UK businesses, with energy bills rising by an average of 5.5%. Regional disparities in energy costs add further complexity, making it crucial for businesses to explore opportunities to reduce expenses, such as switching suppliers—which could save up to 6% annually.

In a time of ongoing economic and geopolitical uncertainty, UK businesses must stay proactive in managing their energy consumption. By considering long-term contracts and exploring supplier options, companies can better navigate the rising costs and secure more stable pricing in the months ahead.

To download the report, click here.

About Big Energy Group

Big Energy Group is a privately held, British-owned energy brokerage with an established track record of helping clients successfully navigate the energy market. The company has offices in Harrogate and the Tees Valley and serves more than 400 businesses across the UK. For more information, please visit bigenergygroup.co.uk.

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