Increase in business electricity prices

11th Nov 2022 | Mollie Pinnington | 2 minute read

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It has been reported that there has been a 35% increase in the average unit price of electricity in the UK since 2016.

The UK has the 3rd highest price increase for electricity worldwide. The average price of electricity has gone from 14.35p/kWh to 19.31p/kWh. This steep rise in electricity prices is mainly due to the fact they are still tied to gas prices. 

Electricity prices are based on wholesale gas prices, as the majority of electricity used to be generated by gas-fired power stations. However, only 40% of the UK’s electricity is generated this way anymore. A lot more electricity is generated by renewable energy now, but this electricity is still priced based on gas prices even though it is produced by much cheaper renewables.        

The government have introduced a new bill to stop how much renewable energy generators can make due to this. However, this is not likely to make much of a difference in energy bills. This is because although it will stop high electricity prices from renewables, a lot of the country’s electricity is still generated from gas-fired power stations. This means the wholesale of electricity might not be affected much.   

Although electricity prices are going up your business does not have to worry too much, for the time being, this is because The energy relief scheme will help businesses with this for a short amount of time.

However, this support is not going to last forever, and prices could be even worse by the time the support comes to an end next March.

How can your business cope with rising electricity bills?

If your current contract is coming to an end, then it is best to ensure that you are on another contract, with fixed rates.

This is because out of contract or deemed rates are amongst suppliers’ most expensive rates. Plus, you will also be missing out on getting the same savings those on fixed rates are getting from the business energy support.

Introducing energy efficient practices in your business can help you consume less energy and consequently save money on energy bills. 

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