Over the past 12 months, wholesale energy prices have hit an all-time high. It is a far cry from the record low prices seen during Covid-19 as countries went into lockdown and demand plummeted. However, since the easing of Covid-19 restrictions, there has been an increase in consumer demand, and global supply has been unable to keep up.
Due to this, wholesale energy now makes up 50%-60% of the cost of what consumers pay for their energy, and as a result of the UK’s, this means that both businesses and individuals alike are paying more for their energy.
What’s caused wholesale electricity prices to rise?
The rise in wholesale energy prices has been caused by simultaneous reduced supply and increased demand. This includes environmental factors such as lower winds leading to less renewable energy being generated and under-maintained power plants due to the backlog caused by Covid-19 restrictions.
In addition to this, the conflict in Ukraine has pushed rates even higher. This is because of Europe’s heavy reliance on Russian gas. For example, in 2021 Russia made up 40% of Europe’s gas imports which has had a knock-on effect on the UK as the country imports almost half its gas from Europe.
How does an increase in wholesale electricity price affect your business?
Businesses of all shapes and sizes from large-scale ones to smaller local shops will see an increase in their energy bills, reducing their profit margins and thereby ability to expand.
Due to there being no price cap on business energy rates, suppliers can increase their out of contract rates, meaning that any organisation which lets a fixed rate deal expire will most likely see a massive hike in their energy expenditure.
What can your business do to reduce wholesale electricity bills?
One of the most effective ways to protect your business from the rise in wholesale energy prices is to make use of renewable energy technologies such as solar PV, battery energy storage and electric vehicle charging points.
Why? Because with the addition of these technologies you can generate your own energy to fuel your business’s day to day operations. This thereby lowers your energy expenditure whilst also reducing your dependence on the national grid.
Furthermore, due to the higher energy rates, the system’s payback time would be significantly reduced, allowing your business to see a return on your investment sooner.
Ultimately, this will defend your profit margins and could be the difference in a highly competitive market.
Can we help?
As one of the UK’s market leaders in renewable energy solutions, we are in the best position to help your business realise the potential of renewable energy technology.
Our team of renewable energy experts are available to provide Net Zero consultancy and renewable technology (Solar PV, Solar Carports, HV/LV, Electric Vehicle Charging, Battery Energy Storage) quotations alongside installation operations and maintenance support to asset owners.
Ultimately, the transition to electric vehicles is upon us, and now is the best time to procure an expert to guide you on which solution is best for your business