Recent research has shown that the average business consumes 12.3% less energy than they did last year. Most large businesses across the UK are driving this trend as small business energy consumption has slightly risen.
The main reason for the reduction in consumption was most likely due to fears that prices were going to start rising, making large companies less competitive than they already are.
Although the average consumption levels were dropping in 2024, businesses were paying 12.6% more for their energy in the last quarter of 2024 compared to the third quarter of 2024.
Why are businesses spending more on energy?
Although the energy demand from businesses has dropped, there are several reasons why businesses, like yours, are facing higher energy costs:
Volatile energy markets
The global energy market has become increasingly unstable since the energy crisis in 2022, with unpredictable price swings driven by supply and demand fluctuations. Fossil fuel prices have experienced sharp increases due to supply chain disruptions and geopolitical uncertainties. Many businesses have been forced to absorb these higher costs or pass them on to consumers, impacting profitability.
Conflict and geopolitical tensions
The ongoing conflict in Ukraine and sanctions against Russia, a major exporter of natural gas and oil, have significantly disrupted global energy supplies. Many European countries, which previously relied on Russian gas, have had to source energy from alternative suppliers, driving up costs worldwide.
Colder weather and increased energy demand
Recent colder weather has also contributed to rising energy costs. This is due to higher heating demand and a lack of supply from renewables like solar. This has further strained supply in the UK. This surge in consumption, combined with market volatility, has left businesses with higher and less predictable energy bills.
As energy remains a critical expense, businesses must adapt by improving energy efficiency, investing in renewable energy, and securing long-term contracts to mitigate costs.
What should businesses do to reduce prices?
Your business should continue to work on using less energy and securing long-term contracts.
Businesses should remain careful as variability in the market could continue to increase, mainly due to weather changes and instability across the global wholesale market.
Businesses can significantly reduce their expenses by securing long-term contracts with suppliers and leveraging energy brokers to negotiate better deals.
Long-term contracts for cost stability
Locking in long-term agreements with suppliers could help your business secure lower rates and avoid price fluctuations. Many service providers offer discounts for extended commitments since they prefer long-term, stable customers. By negotiating multi-year contracts, you can benefit from predictable expenses and avoid sudden price increases caused by market volatility.
Working with brokers for better rates
Brokers specialise in finding cost-effective contracts by leveraging their industry expertise and extensive supplier networks. They have access to wholesale pricing, exclusive deals, and competitive rates that businesses may not be able to obtain on their own. By working with a broker, businesses can:
- Compare multiple contract options from different suppliers
- Gain access to volume discounts and wholesale pricing
- Avoid hidden fees and unfavourable contract terms
- Reduce the time and effort required for negotiations
By combining the benefits of long-term contracts with the expertise of brokers, businesses can achieve substantial savings, improve budget forecasting, and enhance overall financial stability.
If you're looking to save money on your energy bills then why not get in touch today? The relationships Resolve Energy has developed with over 24 of the UK’s biggest business energy suppliers allows our energy experts to source the best business energy rates available for your company right when you need them. Request a free quote today and start saving money on your energy.
