As the domestic energy price cap is set to rise this April, we can expect commercial energy prices to follow suit. This essentially means that you could see higher renewal prices for energy during the spring-summer months this year. This is mainly due to a rise in wholesale prices across the global market and the UK’s reliance on expensive fossil fuels.
Wholesale prices in the UK are still seeing rises every quarter. Several factors have accounted for this, such as a lack of gas storage, volatility in markets, and geopolitical issues.
At the end of 2024, the EU and UK had 18% less gas stored compared to the end of 2023. This lack of storage has left gas and power prices more fragile to changes in the weather and other market conditions.
At the end of 2024, the transit deal between Ukraine and Russia came to an end. Despite the conflict, Russia had been paying Ukraine to transport some of its gas to EU countries. This agreement expired in December 2024; this was a shock to the markets, causing prices to increase across the UK and the EU.
Predictions for summer 2025 prices
Wholesale prices have shown a strange trend for this summer, as prices look to be higher than in the winter. This is most likely because the market is expecting more fluctuations throughout the year due to the expectation that the conflict between Russia and Ukraine could come to an end with the recent US presidential election result.
Impact on businesses
Higher energy costs can have numerous impacts on businesses in the UK. From operational costs to overall financial stability, energy costs can be a make or break for companies. Some factors include:
- Higher energy bills: When energy bills increase, this can lead to lower profits and higher operational expenses. This can be detrimental to a company’s bottom line if you’re not careful.
- Operational adjustments: When energy prices rise, some businesses must make changes to the way they operate to compensate. This could include reducing opening hours, closing on certain days, or letting go of staff to manage rising costs.
- Delayed investments: Over the past few years, higher energy costs have made a significant impact on the type of investments companies make. Many businesses across the UK have had to scale back investments and growth initiatives to ensure they cover high energy costs.
- Competitive disadvantages: energy-intensive industries, such as manufacturing businesses, have faced a competitive disadvantage, especially when it comes to trading across the EU.
How to prepare your business
From the above, you can probably tell that none of the consequences of high energy prices are ideal for businesses. So, what can your company do to combat this?
- Get help with procurement. Having support with business energy procurement from a professional such as a business energy broker could save you a lot of time and money. Energy brokers have in-depth market intelligence that helps them understand the best time to switch. Alongside their in-depth knowledge, energy brokers can also leverage their relationship with suppliers to negotiate better prices for businesses.
- Explore the market: Ensure you keep up to date with fluctuations in energy prices. This can put you in a better position to ensure that you renew your contract at the right time.
- Energy reduction strategies: Consider sustainability and energy reduction strategies that your company could implement to reduce energy waste.
- Investments in renewable energy: Invest in long-term renewable energy solutions such as solar panels or voltage optimisers to reduce your reliance on expensive fossil fuels.
Get in touch today to see how our team can help your business combat high energy prices!
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