An average annual electricity bill for a small business is forecast to hit £13,264 from next April
New research by business energy forecasters Cornwall Insight shows the sheer scale of the price increases that small and medium sized UK businesses have had to grapple with in the previous four years.
Government ministers are being urged to intervene or look at schemes to help as companies are collectively looking at prices being 70% higher in 2025 than they were before the energy crisis began after Russia’s invasion of Ukraine.
They found that a typical small business such as a pub, restaurant or independent retailer would be paying £5,000 more a year now than in 2021.
The average annual electricity bill for a small business is forecast to hit £13,264 from April 2025, which is when most business energy contracts renew. In 2021 this figure was £7,811.
The analysis is based on a typical usage of 50MWh of electricity a year which is set at £239.338/MWh or £3.55 a day.
A microbusiness employing between one and ten people will use an average of 5 to 15MWh a year while a small business which employs between 11 and 50 will use 15 to 25 MWh. More energy intensive activities such as pubs or restaurants will invariably be using even more.
Wholesale gas prices began skyrocketing before the invasion in 2021 and pushed the average business cost to over £20,000 before falling to the typical level of £13,170.
While Russia and Ukraine remain in conflict, the driver for the rise in energy costs next year is a rise in standing charges in gas and electricity.
Last week Ofgem announced that annual household bills would rise by 10% from October, protected to an extent by the annual cap. Businesses do not have this and instead are fixing their annual price for at least a proportion of their requirements.
The last government intervention into the energy market was in late 2022 with the Energy Bills Relief Scheme (EBRS) which was replaced by the Energy Bills Discount Scheme (EBDS) which concluded in March 2024.
Chris Horner, insolvency director with BusinessRescueExpert said: “Householders have a level of protection that businesses don’t enjoy.
“While many directors will be hoping for more strategic intervention from the new government, the chancellor and Prime Minister have already made clear in their public comments that this is unlikely to happen.
“Increasing green domestic energy production will inevitably help deliver lower bills for everybody eventually but the results will still be several years away. Directors and business owners need more certainty now.”
Certainty is one of the most valuable commodities in business and even if you can’t rely on energy price predictions – you can have a plan that covers most eventualities.
This is why we offer a free initial consultation to any business that wants to fully understand what options are available to it now depending on its financial circumstances and aims.
Once directors understand exactly what they can do to improve their situation in the short and medium term, they can act with certainty – whether it’s to restructure to allow an eventual return to profit or an efficient closure to allow directors to move onto their next venture – without unsecured debt holding them back.