The Future of Business Energy Prices

November 20, 2018

Managing ongoing costs is an absolute requirement for the vast majority of businesses operating today. Between supply chain, staffing, stock management and ongoing insurance costs, the price of running a business can be startlingly high – and that’s before you get to the cost of energy.

Energy prices have been high since a remarkable 35% price hike in 2008 and prices have barely slowed down since. Alongside an economy which has grown slowly, it’s proven to be a tough business environment to operate within, but what does the future of business energy prices hold?

Although it’s impossible to truly predict the future with total certainty, the overall trend of energy prices has been one of continuing global growth – for both home and business consumers – despite the growth in low-cost renewable energy.

It’s why our Energy Recovery Systems continue to prove popular amongst manufacturers, promising an ROI in as little as 9 months and a 35% energy saving on power consumed by dehumidifiers.

But what are the aspects which pose a threat to low-cost business energy? Join us as we take a look:

Brexit uncertainty

Tired as many of us may be of it, Brexit uncertainty continues to rumble on across the entire country.

One of its lesser discussed aspects though is the effect that it may have on energy prices. Energy UK has issued a warning suggesting that energy bills are likely to rise as a result of the uncertainty over whether Britain will remain within Europe’s carbon trading scheme, the EU Emission Trading System (EU ETS) after Brexit.

There are also concerns over the UK’s place within the EU’s internal energy market, as well as issues with the nuclear industry should leave the Euratom without a replacement body prepared.

A mixture of cuts in investment, leaving the EU BTS, increased transportation costs across hard borders and more are all part of the Brexit uncertainty package.

Wholesale energy prices

Wholesale energy prices have a huge impact on the cost of electricity for businesses over the world. After all, you won’t be able to buy gas or electricity cheaper than it costs the supplier to source it.

Although wholesale energy costs typically make up only around 46.6% of your overall energy bill, wholesale price changes are often cited as the reason for price rises.

Wholesale prices tend to be volatile, driven by market demand, global politics and supply constraints, making them hard to plan. For businesses, managing a volatile energy market is easier than the domestic customer, thanks to the ability to bulk-buy energy at lower prices.

Rising supplier costs

A large contributor to rising energy costs for businesses, if you’re to believe energy suppliers, are the rising non-wholesale costs to the suppliers themselves.

These costs include transporting energy (along cables and pipes which aren’t owned by the energy companies), customer care, government policies, taxes and suppliers operating costs. Oh, and of course, the degree of profit energy companies demand.

These rising costs, coupled with wholesale prices, combine to drive up the cost of business energy.

So, with price hikes on the horizon, why not invest in an energy recovery system which can deliver years of energy bill reductions?