Reduce the impact of rising energy costs

Record prices for gas and electricity are increasing running costs for small businesses across the UK. Find out why prices are rising, actions you can take to quickly reduce costs, and what support is available.

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Contents

  1. Understand why prices are rising
  2. Reduce gas and electricity use with low cost measures
  3. Generate your own energy
  4. Get the best energy deal
  5. Find funding and support
  6. Send us feedback on this page

Understand why prices are rising

Gas prices are at 30-year highs due to short supply and high demand. This increases the cost of electricity as gas is used for a large share of power generation in the UK.

High prices are set to continue for at least the next 6 months and it’s not clear when they will fall substantially.

According to a recent NatWest survey, 70% of SMEs said high energy bills are having a negative effect on business growth.

Reduce gas and electricity use with low cost measures

According to the Energy Savings Trust the average SME can reduce its energy bill from 18 to 25% with efficiency measures and behavioural changes.

Select a section below to get started.

Heating, ventilation and cooling

Heating, ventilation and cooling (HVAC) systems account for 40 percent of an average SME’s total energy bill.

Reducing the power they use can have a significant impact on energy bills.

Set your heat lower and save 8% monthly for every 1C

According to a GOV.UK energy saving guide you can reduce your monthly heating bill up to 8% for every 1C you reduce the average temperature.

If you have thermostats that can be adjusted by room, set them to:

  • 20C where people are idle
  • 18C where people move around or through
  • 16C in any room when nobody is on site

If you have a single thermostat for your entire premises, set it to the lowest comfortable temperature for the hours people are at work.

Program it to go down after hours or set a reminder to do it manually. It can also be helpful to appoint a staff person to be responsible for thermostats.

Set your cooling higher and save 1% for every .5C

According to the US Department of Energy you can cut energy consumption up to 1% for every .5C you avoid reducing the average temperature over an 8-hour period.

Set your air conditioning to 24C during the hours people are at work. This temperature works well for office spaces but may need to be lower if people are active while at work.

Program or manually change your after hours temperature as high as 29C. This is the maximum temperature to avoid heat damage to your premises.

Get a smart thermostat and save up to 10%

Smart thermostats control your heating and cooling systems through a digital display or app on your phone. This gives you more flexibility to control and schedule temperatures.

Energy Star estimates that smart thermostats save an average of 8% on heating and 10% on cooling,

You can program a schedule manually or set it to learn when you’re present and adjust automatically. Many have energy saving modes that will set temperatures to the limit you’re comfortable with.

Smart thermostats are getting cheaper with basic models starting around £100. If you have a basic heating and cooling system you may be able to install it yourself.

Do regular maintenance to avoid up to 30% in cost increases

Carbon Trust estimates that operational maintenance on your boiler, air conditioning and other HVAC systems can avoid up to 30% in cost increases.

You may be able to do easier tasks like cleaning or replacing air filters. Call a technician for tasks such as checking combustion efficiency or refrigerant levels.

Technicians can also help with low cost measures such as airflow gauges and better coordination between boilers, coolers, pumps and exhaust fans.

Reconfigure thermostats and workspaces

If your thermostat is affected by sunlight, draughts or radiators it won’t work properly. To relocate it you need to:

  • find a place away from radiators, vents, windows and doors
  • run wiring to the new location
  • repair the wall in the old location

Expect to pay between £100 to £350 for the wiring and repair. The cost depends on how far away it is being relocated.

It also makes sense to check if employees or equipment are located too close to radiators or cooling vents.

Draught proof doors and windows

Doors and windows are a major source of heating and cooling loss in a building. Some of this can be prevented by making sure seals and draught proofing are in place and working properly.

Many tasks you can do yourself or cheaply through an installer. Make sure your premises is as efficient as possible by:

  • sealing and weather-stripping around windows, doors and ductwork
  • fitting exterior doors with spring-loaded or automatic closures
  • using PVC strip curtains between spaces with different temperatures

Check the Energy Savings Trust advice on draught proofing for more details.

Install overhead fans and save up to 15% annually

Overhead fans save on heating by recycling warm air to the ground where it is needed. In summer they can save on cooling by moving the air to create a breeze. This can make a room feel up to 2C cooler.

This allows you to run heating and cooling systems less often. According to a US study, this can save up to 15 percent on commercial energy bills.

Not every workplace is suitable for overhead fans – they need enough clearance from the ceiling and ground level to operate properly. You also need to make sure the speed and air movement rating of the fan matches the size and use of your space.

Upfront costs vary widely. Simple models start around £250 and can be installed with basic electrical knowledge. Larger models can cost as much as £5000 and require integration into your current HVAC system.

Insulate your pipes, loft and walls

Investing in better insulation can have a quick payback depending on the state of your current building and what type of measures are needed.

Foam insulation around exposed pipework is a low intervention fix that can save up to 70% of energy loss and avoid overheating.

Other types of insulation include:

  • loft insulation – average payback time of 2 years
  • cavity wall insulation – average payback time of 3 to 5 years

Solid wall insulation and new windows take longer to pay back. Visit our insulation and windows page for more details.

Production equipment

Production and mechanical equipment are energy intensive to operate and expensive to upgrade.

In the context of an energy crisis, it makes sense to check existing equipment is running efficiently and replace components with the fastest return on investment.

Check compressors are running properly

Air compressors are essential to many mechanical processes. Ensure they run as efficiently as possible by:

  • checking for leaks – a single 3mm hole can cost £2,000/year
  • switching off when not in use – idling uses up to 70% of full power
  • setting pressure at lowest level for each application
  • making sure there is ventilation space around the compressor

While most new air compressors come with digital monitoring systems, you may be able to retrofit or improve older models using digital tools.

An ultrasonic leak detector costs around £500 but will often pay back in under a year. Find more digital retrofit ideas on the Plant Services website.

Check motors are running efficiently

Electric motors account for two thirds of the energy used in industrial settings.

The cost to operate them can exceed the upfront price in as little as two months, so it makes sense to check that they’re running efficiently. Reducing motor speed by 20% can cut its energy consumption in half.

No-cost steps include:

  • labelling switches and turning off when not in use
  • making sure speeds, fans and other settings are optimised and in use
  • cleaning on a regular basis to avoid overheating

Lower cost steps include:

  • interlocking motors to run in coordination with other equipment
  • installing energy monitors to find efficiency and performance issues
  • using the Energy Technology List to purchase efficient replacements

Install variable speed and frequency drives

When you’re ready to invest in new equipment, variable speed or frequency drives can have a major impact on efficiency.

Up to 20% of the energy to power electric motors is wasted in throttling mechanisms used to slow down the flow of air and liquids. A variable drive avoids this by helping a motor run at an optimal speed depending on operating demands.

Payback time varies based on the cost of electricity, the size of your motors and how much they can be slowed down to work at peak efficiency. Note that a decrease in speed of 10% will save you almost 30% in energy costs.

Use a variable drive payback calculator to get an idea of how much you could save.

Improve refrigeration efficiency

Refrigeration is an energy intensive activity, accounting for up to 50% of energy costs in some cases. Regular maintenance alone can save up to 10% of this cost.

No and low-cost measures include:

  • making sure fridges are no more than 75% full
  • repairing or replacing door seals and PVC strip curtains
  • relocating refrigeration units away from heat sources and draughts
  • keeping condensers and evaporators clean and frost-free

If you have retail style cabinet fridges or freezers, investing in curtains, blinds or doors can pay back in as little as 7 months.

Check the refrigeration section of the Energy Technology List for more detail, including costs and benefits of replacing entire cooling units and systems.

Lighting

Lighting accounts for 14% of the average energy bill for commercial buildings. This amount can often be reduced through low-cost upgrades, maintenance and using natural light.

Maximise natural lighting

Taking advantage of natural sunlight reduces the need for artificial lighting. No cost measures include:

  • move furniture or obstructions away from windows
  • keep blinds open as inside temperature allows
  • arrange your workspace to take advantage of natural light

Lower cost measures can also help.

If it’s time to replace your blinds, horizontal models do a good job of letting light in without putting workers in direct sunlight.

You can also reduce the need for artificial lighting by repainting walls with a colour that has a high light reflectance value (LRV).

Install automatic lighting and save up to 60%

Automated lighting systems have high upfront costs but can pay back quickly. Studies have shown they can save up to 60% on lighting costs.

Options for these systems include:

  • schedules that switch lights on and off automatically
  • motion sensors that turn on lights only when people are present
  • ‘daylight harvesting’ sensors that dim lights when natural light is present

There are options for wired and wireless systems. Wireless is often cheaper and easier to install, though it limits the number of lights you can add to the control system.

If a workplace system is too expensive you can get started yourself by changing traditional light switches and fixtures to motion sensor models.

These start around £10 for a switchplate and £20 for a fixture.

Switch to more efficient bulbs and save up to 90%

Older fluorescent tubes and sodium lights are inefficient compared to the current standard of T5 fluorescent lights and LEDs.

Compared to the energy required to power older T8 or T12 fluorescents, T5 lights save up 45% while LEDs save up to 90%.

Upfront costs and the payback period depend on your current bulbs, fixtures and the price you pay for electricity to run them.

Use Carbon Trust’s lighting business case tool to find out how long it would take upgrades to pay for themselves.

Office equipment

In an office workplace, office equipment is a major source of energy use and excess heat.

A Loughborough University study shows that they consume 20% of electricity used in a typical office setting.

This energy can be reduced up to 70% by switching off appliances when not in use and replacing them with more efficient models when the time comes.

Monitor energy intensive appliances

Appliances such as fridges, kettles, dishwashers, microwaves, computers and printers should be optimised for efficient use.

This includes:

  • checking door seals and cooling levels on fridges and freezers
  • making sure fridges are a maximum of 75% full
  • filling dishwashers completely before running
  • replacing older appliances with newer high efficiency models
  • using a single communal printer instead of local machines
  • switching from desktop to laptop computers

Generate your own energy

Installing solar panels can reduce your reliance on the National Grid and avoid higher energy costs.

Check our solar panels page to find out what types there are, how much they cost and how it benefits your business.

If your business is located in an area without many trees or tall buildings, it can also make sense to install a wind turbine.

If you install renewable measures onsite at your business, check if you qualify for a business rate exemption.

Get the best energy deal

With wholesale prices currently at record highs, business energy suppliers have limited ability to offer tariffs that discount the cost of energy over a fixed term.

They may offer other incentives such as contract flexibility, better customer service or discounts for using Direct Debit.

Stay on your current deal if it has favourable terms

If your current deal is fixed below the current market price for energy, it is unlikely you will get a lower price by switching to a new plan or supplier.

Stay on it for as long as possible and make sure you know if there are renewal provisions and when it’s set to expire.

Shop around if your current deal is expiring soon

It makes sense to shop around for a new business energy deal if your current deal is expiring soon and you don’t plan to renew it.

Suppliers may roll you onto a more expensive default plan if your deal expires without giving notice of a renewal or planned switch.

Check the OFGEM website for advice on how to compare suppliers. There are a number of services to help with this, including hiring an energy broker.

Ask about a smart meter

If you don’t have one already, ask your supplier about installing a smart meter. If you’re eligible one will be installed at no direct cost to your business.

These devices provide real time information on energy consumption and help make sure you’re only being billed for what you use.

You can also get access to a broader range of energy deals, including ‘smart tariffs’.

Check the OFGEM website for more guidance on smart meters.

Find funding and support

There are several ways to get short and long term support to manage higher energy bills.

Ask your supplier about a payment plan

If you need urgent relief from high bills, ask your energy supplier about a payment plan or access to hardship funds.

Check the OFGEM website for advice on talking to your supplier.

You can also get help from the Citizens Advice website.

Find business grants and schemes

Use our funding and support page to find green business grant programmes in your region. Many help with improving energy efficiency and offer matching investments or grants.

You can also check the Charis website for business grants that help with high energy costs.

Get a business rate exemption on renewable energy generation and storage

From April 2022 you can get a business rate exemption for eligible equipment used in onsite renewable energy generation and storage.

According to the Spring Statement you must be located in England and purchase:

  • solar panels, heat pumps or other onsite renewable technology
  • energy from low-carbon heat networks

Check GOV.UK’s guidance on business rate relief for full details when they become available.

Save the VAT on energy saving measures at home

From 1 April 2022, VAT will no longer be charged on some domestic energy saving measures in England, Scotland and Wales.

This means that it will be cheaper to make your home business more energy efficient. Measures include insulation, heat pumps, solar panels, wind turbines and more.

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