Gas and electricity prices are forecasted to reach £13,264 per year in 2025-26 for a typical small business, which now spends over £5,000 more per year on energy compared with 2020-2021, according to research consultancy Cornwall Insight.
With the escalating conflict in the Middle East pushing up the price of oil, there is a growing fear that energy bills could spike even higher.
Smaller firms are particularly vulnerable to energy price increases, as tighter margins make it harder to absorb additional costs.
Unlike domestic energy users, British businesses receive no protection from Ofgem’s energy price cap, which limits standing charges and unit rates on gas and electricity for households. (In Northern Ireland, there is no price cap for businesses or domestic customers.)
Here’s how to make the energy you use for your business go further.
1. Get smart about waste
Reducing energy consumption starts with understanding your usage. “If you can’t see your energy, you can’t save energy,” says Ella Jones, Group Sustainability Manager at renewable energy company Luxion. Jones encourages all business owners to join ‘the smart meter revolution’ so that “you can see where the energy you are paying for is going”.
If you don’t have a smart meter at your business premises, request one from your provider or speak to your landlord if you’re renting the space.
Free apps such as Loop can highlight cost-saving opportunities, such as eliminating phantom load—the energy consumed by appliances on standby. This unseen usage adds up to 30% to bills, so diligently switching devices off at the socket can create savings over time.
Smart thermostats (costing £100-£250) let you control your heating remotely and can avoid wasted energy by ensuring you only heat occupied areas.
Tip: For the most accurate data on your current business energy consumption and opportunities to save, consider an energy audit. Paying for a professional audit could set you back £1,500, so read our guide on how to create your own energy audit first.
2. Look after your equipment
Older appliances and electronic equipment often use more energy than newer, more efficient models. You could save energy (and money) by upgrading your equipment, however, it will take time to recoup the initial outlay.
“Don’t just upgrade things if you don’t need to,” says Jones, advising small businesses to focus on keeping their existing appliances “in tip-top condition” and read the manufacturer’s instructions to ensure they’re used as efficiently as possible.
Tip: When shopping for tech for your business, look for Energy Star-labelled office equipment which uses around half the electricity of standard equipment and could lead to savings of up to 75% on some products.
3. Don’t heat damp air
As the outside temperature drops, it’s tempting to keep doors and windows shut at all times. But, allowing humid air to escape could make it quicker, and therefore cheaper, to heat your premises.
“The better you’re ventilating a property, the further your energy is going to go,” says Jones, explaining: “It’s much more expensive to heat wet air than it is to heat dry air”.
Deliberately ventilating a space is different to leaving draughts unchecked; it’s still a good idea to look at where heat is escaping. You can pay a professional to draught-proof your premises, but wind-proof tape is an inexpensive way to deal with draughty windows yourself.
Tip: Trapping moist air indoors could lead to dampness, potentially damaging your building and your health, so open windows regularly to let moisture out and fresh air in.
4. Switch to LED lights
LED lightbulbs use up to 90% less energy and last 20 times longer, adding up to savings in a matter of months. Replacing eight incandescent bulbs with LEDs could save your business more than £1200.
Lucy Stean runs LMA Studios, a dance studio in Hertfordshire. She estimates her studio has 70 to 80 ceiling lights in near-constant use. “I had an electrician come in and check them to make sure that they were LED,” said Stean. “I can’t imagine how much it would cost me if they weren’t, because they’re on all day”.
Tip: LED lights are more expensive to buy upfront. However, the lifespan of an LED bulb means you’ll continue benefiting from lower energy use for years to come.
5. Fix your rates to future-proof your finances
Fixed-rate energy deals can provide small businesses with much-needed financial stability. It’s worth comparing your recent monthly energy bills with fixed-rate deals currently on offer.
Stean opted for a 12-month fixed rate with Octopus Energy to help control costs. “If you’re looking at a tight budget, [rising energy bills] can eat into your profit so easily,” she says.
Tip: If you lease your premises and energy rates are rolled into the monthly rent, this doesn’t necessarily mean you can’t reduce what you pay. “If your landlord looks after the energy bills, you’ve got every right to ask them to switch to another supplier if you think you’re paying too much,” says Les Roberts, a spokesperson for the energy broker Bionic.
Explore longer-term sustainability solutions
Green energy solutions, like solar panels, can lower your costs and your carbon footprint, and these options are becoming more affordable.
Brett Welch owns a micro-brewery in Scotland and has seen his electricity bills rise steeply over the past two years. Welch sought external investment to buy the farm building he previously leased. He plans to add solar panels and replace the boiler – changes he couldn’t make while renting.
“Now that we own it, it’s really important to our business that we’re as environmentally friendly as possible,” says Welch.
Tip: Don’t assume sustainable energy is out of your financial reach. “You can get a [solar panel installation] with a battery for around £5,000 now, and depending on your consumption, you could be practically self-sufficient with your electricity supply,” says Jones. With most businesses seeing a return on their investment within five years, she considers solar energy “a no-brainer in a lot of instances”.
Image source: Getty Images
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