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. Why prices are rising
  2. Monitor your energy usage and contract
  3. Save using low or no cost measures
  4. Invest in long term energy savings
  5. Generate your own energy
  6. Find funding and support
  7. Send us feedback on this page

Why prices are rising

Natural gas prices are at record highs due to short supply and high demand. 

This is being caused by a range of geopolitical factors, including the war in Ukraine and strong global demand for gas.

High gas prices also increase the cost of electricity. This is because gas is used for a large share of power generation in the UK.

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

As it’s not clear when prices will decline, there are strong incentives to use less energy and lower costs in the meantime.

Monitor your energy usage and contract

A first step toward energy savings is monitoring your consumption and how much it costs according to your contract.

This is important for SMEs that don’t regularly monitor usage or haven’t looked at the details of their energy deal in some time.

Install 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. They can also be programmed to send alerts once you’ve reached certain usage thresholds.

Having one means you can access a wider range of energy deals, including ‘smart tariffs’.

Check the OFGEM website for more guidance on smart meters.

Sub-meter high usage activities or equipment

Sub-meters measure the energy usage of a particular business activity, area or type of equipment. 

This helps identify what parts of your business are the most costly and where you can save.

Simple models that monitor electricity cost as little as £20. These are good for measuring individual appliances or outlets. Basic commercial gas meters start around £200.

To get more accurate data, several companies offer customised services that:

  1. Analyse your energy usage
  2. Install multiple sub-meters
  3. Link the meters to monitoring software
  4. Help you set targets for savings

Assign responsibility for your energy program

Depending on the size of your business it can be helpful to assign your energy management program to a particular job role or working group.

This helps make energy savings a business priority and ensures that your program will continue despite staff turnover.

Switch off a default energy tariff

If you have a new business premises or your last contract ended without a renewal plan, you may be on a ‘default’ energy tariff.

The cost of energy is often highest under this type of deal. Check to see if your supplier allows switching to a cheaper plan and if a notice period is required.

Learn more about switching your business energy on the OFGEM website.

Stay on your current contract if it has favourable terms

If your current deal is fixed at a good price, 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 contract is expiring soon

It makes sense to shop around for a new business energy contract 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.

Save using low or no cost measures

Many energy savings measures require little or no financial cost.

Rather you can achieve substantial savings by spending time and attention on behavioural changes and smaller scale investments.

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

Set your heat lower

If your thermostats can be adjusted by room or activity levels, set them to:

  • 19 to 21°C where people are idle
  • 16 to 19°C where people are active
  • 16°C 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 or switch off after hours, or set a reminder to do it manually.

The Health and Safety Executive suggests the minimum workplace temperature should be 16°C, but employers can decide what levels are best for comfort and productivity.

Check the Carbon Trust’s Heating and Ventilation guide for more specific temperature ranges based on business type and activity levels.

As there is no legislated maximum workplace temperature in the UK, businesses must decide what levels are best for comfort and productivity.

Avoid overcooling

To avoid overcooling, set your air conditioning to the highest comfortable temperature for the hours people are at work. 

Studies on office workplaces have shown that productivity starts to go down once temperatures exceed 24°C. 

After business hours you can let indoor temperatures rise as high as 29°C. This is the maximum to avoid heat and humidity damage to your premises.

Create a temperature ‘dead band’

To prevent competition between your heating and cooling systems, set your thermostat to create a gap between one switching off and the other coming on.

This gap where no heating and cooling is required is called a ‘dead band’. For example you could set your heating to shut off at 20°C and cooling to come on at 24°C.

A 2016 study showed that a 4°C dead band resulted in an average of 12.7% savings on heating and cooling energy.

Get a smart thermostat

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.

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.

If setting it manually, start by adjusting the average temperature in small increments. Most models will allow you to adjust by .5°C

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.

For businesses that use expensive machinery and equipment, it’s important to make it run as reliably and efficiently as possible.

Do regular operations and maintenance checks

Keeping your building equipment and systems in good working order keeps running costs down and reduces the risk of equipment failure and unscheduled down time.

You may be able to do easier tasks like cleaning or replacing filters. Call a technician for tasks such as tune ups, calibration and programming coordination between different equipment and systems.

Check the Energy Star website for more detailed advice on operation and maintenance.

Move your thermostats

If thermostats are affected by sunlight, draughts or heating and cooling sources they won’t work properly.

The best place to install them is on interior walls away from radiators, vents, windows and doors. This avoids the heating or cooling switching on when it’s not needed.

If your current thermostats are hardwired to your heating and cooling system, it makes sense to install a wireless control system to avoid the expense of running wires to new locations.

This requires installing a ‘receiver’ that’s wired to your heating and cooling system. The new thermostat then wirelessly connects to the receiver to switch the system on and off.

Simple thermostat and receiver bundles cost less than £100 and can be installed yourself in most cases. Larger premises with complicated systems will cost more and require professional installation.

Draught proof doors and windows

Older doors and windows can be 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

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 2°C 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 work well. Premises with vaulted or double height ceilings are most suitable.

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.

Check compressors are running properly

If you run a business with mechanical processes, air compressors are essential to operations. 

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.

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

Check motors are running efficiently

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 sub-meters to find efficiency and performance issues
  • using the Energy Technology List to purchase efficient replacements

Invest in longer term energy savings

Some energy saving measures require higher upfront costs, though with current high prices these will pay back quicker than in the past.

Insulate your pipes, roof 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:

  • roof 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.

Switch to more efficient light bulbs

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

Upgrading from conventional lighting to LEDs can save up to 80% on running costs depending on the efficiency of your existing system.

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.

Install automatic lighting systems

Automated lighting systems have higher upfront costs but can pay back quickly.

Options for these systems include:

  • occupancy sensors for internal lighting
  • night time sensors for external lighting
  • ‘daylight harvesting’ sensors that dim lights when sunlight is present

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

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

​​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. 

A decrease in speed of 10% will save almost 30% in energy costs.

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

Improve refrigeration efficiency

If refrigeration is important to your business it makes sense to buy more efficient models or take good care of the ones you have . Regular maintenance alone can save up to 10% on costs.

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
  • checking the nameplate efficiency of your current model and comparing it to a new one

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 (PDF) for more detail, including costs and benefits of replacing entire cooling units and systems.

Replace office equipment with more efficient models

Office equipment is a major source of energy use and excess heat. It consumes about 20% of total electricity used in a typical office setting. 

Most of this is caused by computers, monitors and other IT equipment. When replacing these, buy efficient models certified by the EnergyStar label. 

Check the Carbon Trust’s office energy guides for more ideas on how to save.

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 more remote 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.

Find funding and support

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

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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