Commercial electricity and gas supply costs have been a real problem over the last few years. The war in Ukraine sent the wholesale cost of natural gas to unprecedented levels – a six-times increase at its peak.
But this winter has been unseasonably mild, and the cost of energy is now returning to normality. This article explores what the abating energy crisis means for businesses.
The importance of business energy prices
Business energy prices in the UK have been a concern for many companies, as energy is one of the most significant operating costs.
One of the primary drivers of business energy prices is wholesale prices, which reflect the cost of generating and supplying energy. Wholesale prices are influenced by various factors, such as global supply and demand, weather conditions, and geopolitical events.
Since its invasion of Ukraine, Russia, the world’s biggest gas producer, has throttled natural gas supply into Europe, casting doubts about the availability of gas supplies for the coming winters. The uncertainty in the availability of future supplies has sent prices through the roof.
Back to normality in the business energy market
This winter has seen record-breaking warm temperatures across Europe. The warmer temperatures have meant gas-fired boilers have consumed less gas in keeping properties warm.
The demand reduction means that gas storage levels are significantly less depleted than forecast leading to a significant easing in wholesale gas prices. The UK still relies on gas-fired power stations to generate electricity, so business electricity prices have also fallen.
Since October 2022, the government has protected companies against the worst of the energy crisis through its Energy Bill Relief Scheme, but this is due to come to an end on 31 March.
Through the crisis, the government discount made comparing business energy suppliers a fruitless effort since the discount effectively fixed the cost of business energy. This, however, is all about to change. Let’s look and what businesses need to look out for next.
Tips for reducing business energy costs
Businesses have several options to reduce energy costs, including energy efficiency measures and switching to cheaper tariffs. Energy efficiency measures include upgrading to more energy-efficient equipment, implementing building insulation, and adopting energy-saving practices.
The best practical tip available to businesses in February 2023 is to ensure they get a fair deal on their business electricity and gas prices.
The easing of business energy rates means that there are now highly competitive fixed prices on offer in the market. We recommend using a business electricity and business gas comparison service to check your current tariff against the market.
Making a hassle-free switch on your utilities will provide companies with immediate reduced costs and protect them against future uncertainty in energy prices.