Despite wholesale electricity costs falling back from the highs we experienced in 2021/22, the long-term trend is for overall prices to keep increasing.
But what’s driving this – and how long will it continue?
For the large consumers I speak to, this is a key question, especially when energy costs are responsible for such a large share of their overheads.
So I wasn’t surprised that so many of our members, along with customers of npower Business Solutions, signed up for our recent webinar: What’s behind rising electricity costs and how to limit the impact to your bottom line.
If you missed it, you can listen to a recording here, where they demystified many complex issues around costs, and shared valuable insights and information about current energy management trends and innovations.
But to whet your appetite, these are the five key messages that I will be sharing with our members in 2025.
1. Growing non-commodity charges
The number one driver behind rising electricity costs is the growing non-commodity elements, which have been steadily increasing since 2010. The main components of this are expanding numbers of green subsidies and increasing network costs.
2. The increase in network and policy charges
Prior to 1991, there were zero industry costs added to your electricity invoice because generation, supply, transmission and distribution was all managed by the Central Electricity Generating Board and 14 Area Electricity Boards. In the 33 years since privatisation, 14 different network and policy charges have been added, with three more due to follow in the next few years.
3. Transition to renewable generation should see decreases to non-commodity costs
These non-commodity costs are forecast to build year on year until 2030 when – if all goes according to plan with the UK’s transition to low-carbon generation – they should finally start to decrease, as the investment in more renewable generation starts to pay off and reduce the price of power.
4. Understanding your data is vital
When it comes to cutting costs, never under-estimate the value of forensically understanding your data. This is essential to not only minimise waste and maximise efficiencies to reduce cost – but also to harness growing opportunities to benefit from demand flexibility, especially in volatile market conditions. You can learn more about why your energy data is a business essential in nBS' video.
5. The rising popularity of CPPAs
Corporate Power Purchase Agreements (CPPAs) are set to rise in popularity, as they deliver financial and environmental benefits to organisations unable to invest in on-site generation – and/or looking to secure a direct source of renewable energy for longer-term price certainty.
You can get more detail on these points – plus lots of additional valuable context, advice and pointers – by viewing a recording of the webinar in full.
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