The UK energy crisis: how is it impacting business energy users?

Times are tough for UK businesses. The recently released figures (June 2022) from the Office of National Statistics (ONS) - which revealed that the UK economy unexpectedly shrank again in April - paint a gloomy picture after two years of economic upheaval.

What is particularly stark is that the ONS figures also showed that all sectors of the economy are struggling under rising prices and inflation. Energy costs - particularly the impact of the rising price of gas - have had a major impact on this.

That is why we conducted a major new piece of research - Business Energy Tracker - where over 200 large businesses have told us the real impact the UK energy crisis is having on their confidence to invest, particularly in the crucial measures that will help the UK meet its net zero targets.

The findings are clear - energy risk is having a significant impact and net zero confidence is starting to wane.

Understandably, as a result, businesses are overwhelmingly calling on Government for more support to help them navigate this current crisis and support their short, medium, and long-term plans.

Energy is now the top business risk, putting net zero in the balance

The findings show that 77% of organisations say energy is now their biggest business risk and 82% believe Government needs to do more to protect businesses from wholesale market volatility. One in five of these believe Government is currently offering no support.

Worryingly, almost half of businesses think that the current energy crisis will harm net zero progress.

Therefore it is so important that the views of businesses are taken into account when policy is shaped. Because the investments they make will play a crucial role in the net zero transition and help us all become more energy independent.

However, at the moment the message coming through loud and clear from our research is that the current policy is not doing the job it needs to do to support them at a time when energy is their biggest concern.

How can businesses manage energy risk?

For us, there are several key takeaways that all stakeholders should take from this research. This includes Government and industry organisations, as well as energy partners like us and the businesses themselves.

1. There is a need to accelerate energy efficiency: we need to double down on action that can have an impact now: reducing energy demand through energy efficiency and electrifying heat and transport where possible. While tax breaks and capital allowances go some way to supporting this, more can be done.
2. Energy market volatility is not going away, so achieving independence is key: We also need to ensure that policy support for businesses is a key priority in the next Autumn Budget. While measures such as the Energy Security Strategy were welcome, direct benefit to business is so far lacking.
3. Net zero cannot lose momentum: The next 10 years is undoubtedly the ‘decade of delivery’ when it comes to net zero. That is why it is so important that net zero momentum cannot stall. This research shows that there is weakening confidence in net zero, despite many businesses recognising the benefits it will bring. Businesses need support to keep their plans on track.

At npower Business Solutions, we are committed to ensuring that the voice of business is heard at the highest level. The insight from the Business Energy Tracker will give us the opportunity to present the findings to Government, as well as other influential stakeholders.

We also recognise our role in helping businesses right now and in the future. That is why we are committed to continued support for both our industrial clients and policymakers to drive the best outcomes for business.

Only by working together will we see the progress we all need.

You can download your copy of our Business Energy Tracker here.