With energy costs having become an increasing overhead in businesses post pandemic, Q1 of 2023 saw the highest number of business closures since records began in 2017, with 99% (100,000) of these being small sized companies.
How can small businesses reduce energy bills and stay afloat in this market?
While businesses may feel like they are doing everything they can to reduce energy consumption, turning off lights and electronics when not in use is not going to cut it.
Furthermore, during the winter months, heating becomes a cost that must be factored into energy bills, with workplace regulations stating that all indoor workplaces must be heated to a minimum of 16°C[4].
Therefore, while businesses cannot simply decide to cut energy consumption in an effort to reduce bills, there are a number of ways that they can help reduce costs:
1. Demand side management
Demand side management is a strategy used by energy suppliers to help reduce or modify your businesses energy usage in return for a reduced rate. This may not be an option for some businesses, but if staff only come in certain days of the week, or production can be scheduled at off-peak times for example, you can negotiate with your supplier to have your energy bill payments revised.
2. Regular servicing of equipment
Maintenance is the most efficient way of saving yourself money on your energy bills. By ensuring that machines and appliances are serviced regularly can help reduce your bills significantly. For example, the Energy Saving Trust maintains that servicing boilers to get just a 10% improvement can save you £1000 a year.
3. Generating your own energy
While investing in renewable energy equipment is expensive, in the long run it will help you save money. Once your business is successfully making their own energy, you can sell it back to the electricity grid in order to gain tax relief on the equipment that you’ve bought, making it worth the initial investment.
4. Utilise night time energy rates where possible
Night time rates are generally cheaper than day time rates. While it is not possible for most businesses to simply stop using energy throughout the day, there are ways that most businesses can take advantage of these reduced rates. For example, in industries like construction, that may use portable machinery that is usually charged during the day.
5. Seek out updated information
Government agencies and energy providers have a host of information and advice available online. This might sound basic, as new energy rates fluctuate daily, it is best to be clued up on the options available to help your business keep its costs down.
Karl Bantleman at Direct365 commented, “With energy prices continuing to rise as we enter 2024, many businesses throughout the UK are certainly being hit with these increased overheads. In some instances it can become unjustifiable for businesses to remain open, after tireless effort to reduce spending in other areas to account for energy costs of up to five times the amount they were paying just three years ago.
This issue is not as simple as turning off a light or putting on a jumper to stay warm. While there are options that businesses can take, these may not be obvious. Therefore, with the support of initiatives such as the Big Energy Saving Week, aiming to spread awareness to businesses and households throughout the country, hopefully we can all collectively support one another in reducing energy costs and consumption.”
