Small businesses warned that energy bills set to surge to £13,264 next year

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Small businesses across the UK are facing a sharp rise in energy costs, with average bills expected to reach £13,264 by April 2025, according to analysis by Utility Saving Expert, based on Cornwall Insight data. This represents a 70% increase from the £7,811 that small firms were paying before the energy crisis erupted in 2021.

Chris Richards, a business energy expert at Utility Saving Expert, has raised concerns about the impact this will have on small businesses, particularly those already struggling with rising overheads. "Small businesses have been disproportionately affected by these escalating energy prices," Richards explains. "Many are now paying over £5,000 more annually than before the crisis, and without government intervention, the situation could become untenable for some."

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Richards highlights that, unlike households, businesses are not protected by an energy price cap, leaving them more vulnerable to the ongoing volatility in the energy market. "The absence of a price cap for businesses means that firms are completely exposed to these increases. This is creating a real financial burden, especially for those whose energy contracts renew in April," he notes.

Calls are growing for ministers to provide targeted support to businesses, as concerns about closures continue to mount. "With the cost of living crisis reducing consumer spending and high energy bills eating into profit margins, the outlook for many small businesses is bleak unless action is taken," Richards warns.

Small businesses warned 'average' energy bill will rise to £13,264 next yearSmall businesses warned 'average' energy bill will rise to £13,264 next year
Small businesses warned 'average' energy bill will rise to £13,264 next year

Craig Lowrey, principal consultant at Cornwall Insight, has also weighed in on the situation, stressing that long-term energy stability will require boosting domestic energy production. "For all the criticism of the household energy price cap, it does provide a level of protection that businesses simply do not have," Lowrey said. "Given the impact of the cost of living crisis on consumer spending and high street trade, the government will need to seriously consider how to support businesses with their high energy costs if they want to prevent further closures."

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Lowrey added that "boosting domestic energy production" is the “only way” to reduce exposure to international disruption and deliver sustainably lower energy bills. "While this solution is neither quick nor easy, it is essential for achieving long-term stability in energy costs," he stated.

The impact of soaring energy prices is already being felt by businesses like Dreadnought Tiles, a 219-year-old firm in Brierley Hill, West Midlands. Executive chair Alex Patrick-Smith shared that the company’s energy bills have more than doubled since the crisis began. "Last year, we had to cut production and raise prices. I don’t think we’ll see energy costs return to pre-crisis levels. They will likely reset at a higher level, and we expect them to rise again this winter," Patrick-Smith commented.

Utility Saving Expert’s Richards advises small businesses to explore energy efficiency measures to mitigate rising costs. "Companies should be looking at all possible ways to reduce their energy consumption," Richards suggests. "Implementing energy-saving technologies, such as micro-metering systems, can help businesses monitor and manage their energy usage more effectively, identifying where savings can be made."

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He also emphasises the importance of government-backed schemes to support businesses in adopting energy-efficient technologies. "There is some uncertainty regarding current government schemes aimed at helping businesses cut their energy usage, and this is causing concern. Clear guidance and financial support are essential if we want to see widespread adoption of these technologies," Richards adds.

In the interim, Richards strongly recommends that businesses review their energy contracts regularly and compare tariffs to ensure they are not overpaying. "With the market being as volatile as it is, switching energy providers could result in significant savings. Businesses need to be proactive in seeking out the best deals to mitigate these rising costs," he says.

With energy bills set to climb in the coming months, and many contracts due for renewal in April, time is running out for small businesses to safeguard against this next wave of price increases.

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