Businesses in the UK are under more financial pressure than ever before.
This was made clear in the Chancellor’s Autumn Budget, when it was announced that UK employers’ National Insurance contributions will increase by 1.2% to 15% from April 2025.
Budget aside, however, it’s also anticipated that higher costs will be hitting businesses from another angle – energy.
Independent research from Cornwall Insight has revealed that energy prices for small industrial and manufacturing businesses will rise incrementally – exceeding pre-crisis levels by around £200,000 annually.
This 57% increase means that by the April 2026 – March 2027 contract year, these businesses will be paying £232/MWh – which equates to £550,000 annually, based on an average yearly electricity demand of 2.33GWh.
While prices have come down from their peak in 2022-2023, ongoing market pressures and policy changes mean that costs remain well above pre-crisis levels – and this latest research shows that this isn’t going to change any time soon.
This will have a huge impact on organisations, many of whom are already battling to survive.
The aftereffects of the Budget measures and elevated energy costs will mean that small industrial businesses across the UK will be searching for ways to reduce costs over the coming months.
They will be trying to remain profitable amid elevated expenditure – all while still reducing carbon emissions and without pushing these extra costs onto their customers.
Time for a Change in Energy Strategy
So, with energy prices expected to remain high for the foreseeable future, businesses need to take active steps to manage their energy consumption and costs.
It’s no secret that rising energy prices can severely impact profitability, and in some cases, business viability, especially in energy-intensive sectors such as manufacturing, retail, and leisure. Therefore, instead of waiting for market relief, companies can benefit from taking a proactive approach – investing in energy efficiency, exploring renewable energy options, and optimising usage patterns, to name a few examples.
And as businesses start looking at their energy contract renewals ahead of April, this presents a timely moment to rethink their energy strategy.
It’s an opportunity to explore alternatives that help to mitigate price increases and to achieve more stability in an ever-challenging energy landscape.
By making strategic changes as early as possible, industrial businesses can reduce costs, gain more control over their energy spend, and improve resilience in a volatile market.
What Role Can Solar Energy Play?
The £200,000 rise for 2.33GWh businesses is significant, but the good news is that businesses already have the space to accommodate on-site renewable technologies – such as rooftop or ground-mount solar PV systems – and this space is commonly underutilised.
To achieve energy independence, businesses should look to explore generating their own energy – reducing their reliance upon the National Grid and protecting themselves against future price increases, as a result.
Taking on-site solar energy as an example, businesses can hedge circa 20-25% of their energy needs – ensuring more predictable operating costs and a more stable, predictable source of electricity.
And in these unpredictable and uncertain times for businesses, if there’s one thing that’s warmly welcomed, it’s long-term stability.
While being insulated against future energy price shocks is a key advantage of adopting solar, it’s also a strong environmental move, too. It aligns with positioning businesses as forward-thinking, sustainable leaders in their given industry.
It’s also key in helping companies reduce their Scope 3 emissions and support sustainable practices across the supply chain.
What Does the Future Hold?
Ultimately, while energy prices have come down in recent months, we’re most certainly not out of the woods yet, and as Cornwall Insights’ research indicates, we won’t be experiencing pre-pandemic energy prices anytime soon – if at all.
So, as we look ahead to next year when business finances are set to be squeezed even tighter, it’s important for businesses to take measures to become as energy-resilient as possible.
The UK’s industrial and manufacturing businesses need to embrace a more sustainable approach to energy to help them both weather the imminent economic storm and embrace a cleaner, more cost-efficient future.
We practise what we preach here at Shawton Energy and have a large-scale rooftop solar installation at our HQ. We hold regular visits, where businesses can come and see the technology in action. If this is of interest, get in touch to book a slot.
Article authored by Jamie Shaw, CEO of Shawton Energy.