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UK businesses see 12.6% rise in energy costs

UK businesses are now spending 12.6% more on energy compared to last quarter, though costs remain lower than last year, according to a new study

UK businesses are spending an average of £5,160 annually on energy, a 12.6% rise from the previous quarter.

That’s according to POWWR’s Quarterly Energy Barometer Report, which suggests this is still 17.7% less than the same period last year and about half of the costs at the peak of the energy crisis in late 2022.

The report highlights regional differences in energy costs, with businesses in the North East of England paying the least at £4,300 per year, while those in North Wales pay the most at £6,761.

POWWR’s Quarterly Energy Barometer Report, based on over 361,000 data points, reveals that overall energy usage by UK businesses continues to decline.

The average business now consumes 23MWh annually, a 12.3% decrease from the previous year.

This reduction is mainly driven by large companies, as small and medium-sized businesses have shown a slight increase in energy consumption.

According to the report, the average energy contract length remains 25 months across regions with minimal variation.

Smaller companies tend to prefer locking in their energy costs for longer periods at 25 months, compared to 23 months for larger companies.

Matt Tormollen, Chief Executive Officer at POWWR, said: “Whilst it is great that UK businesses are using less and less energy, the average amount they spend on electricity has increased. This is down to a number of factors.

“Firstly, despite market conditions being far more stable, the unit cost of energy has actually increased this quarter due to concerning weather patterns.

“Secondly, there has been an industry-wide increase to the standing charge (the daily charge set by the supplier regardless of energy usage).

“This has mostly been felt by smaller companies who have historically been likely undercharged. The good news is that the change to the standing charges is a natural correction that shouldn’t be seen again for quite some time.”

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