Everything you Need to Know About Rising Energy Costs

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15th Oct 2021

The price of wholesale energy has significantly increased five-fold, which has had a knock-on effect on the price of electricity and gas for businesses and homeowners. This is where switching to renewable energy can hugely benefit businesses that are soon to be faced with colossal bills due to the surge in energy prices. Read on for more information and clarity on the situation; why there is a cost increase and what you can do to save on your future energy bills.

What has Caused an Increase in Energy Prices?

It’s expected that energy bills will continue rising into 2022, but you may be wondering why? As previously highlighted, one factor that has contributed to the sharp rise in costs is the increased price of wholesale energy, subsequently leading to the closure of many energy suppliers across the UK.

Many energy suppliers are facing difficulties with keeping up with the record increase in gas prices. As suppliers collapse due to not being able to fulfil demands, businesses and homeowners are then left in search of suitable energy suppliers. The price of wholesale energy equates to around 40% of household energy bills. Whenever there’s a change in the wholesale price, households must adapt. However due to Ofgem’s price cap, homeowners won’t see much of an increase to their bills in the next year. However, for businesses – the impact can be devastating. With some forecasting increases of millions of pounds over the next year alone!

Another factor to influence the rise in costs, is the exceptionally cold year we have experienced, particularly in April and May, leading to gas storage levels being at a record low. In fact, the capacity for EU gas storage is 20% lower than usual for supplying homes and businesses with energy at this time of year.

There has also been a higher demand for gas in places that supply the UK with LNG (liquified natural gas), such as the US and Asia. This coincides with the reduction of suppliers in the EU, as their need for gas has also increased.

With supply issues looking to be long-term, many are turning to renewable energy to combat the crisis.

Ofgem Price Cap

Ofgem’s price cap can protect homeowners to some extent, however, if the costs of energy continue to rise, the price cap will too. This will affect those who are on a flexible tariff, but homeowners who are on a fixed tariff will be shielded from the increase in costs for the period agreed in their contract. The changes of the price cap came into fruition as of October 1^st, and the next review is likely to take place April 2022.

Businesses, however, do not have this form of defence against sharp rises in energy bills. Consequently, businesses have no choice but to take the brunt of the impact from the rising energy prices. There are, however, many solutions in the form of renewables which will help reduce the damage to businesses affected by the rise in energy prices.

Renewable Energy

Thankfully, there are solutions available to help you power your business and household in an efficient and guilt-free way! Solar power will provide your establishment with all the energy it needs, not to mention it is 100% clean and renewable energy, so not only are you saving money, but you are also helping reduce the amount of harmful emissions released from traditional energy sources. Solar PV systems will significantly reduce your electricity bills and protect you from sharp rises in prices. You will be receiving power from a never-ending, natural source! Additionally, you can pair up your solar PV system with battery storage, allowing you to optimise your use of solar power.

If more businesses and homes followed suit and transitioned to cleaner and kinder methods of power, this would alleviate the need for gas-based fossil fuels. Collectively helping towards reaching a more sustainable future, as well as saving plenty off your electricity bills in the long run.

 

If you would like to discuss the variety of ways we can help you turn your business or home into a hub of clean, renewable and cost-effective energy, contact us today on 01622 832 834. Alternatively, you can email us info@tlgec.co.uk. We’d be more than happy to help set you on the path of altering your lifestyle for the better whilst saving money in the process.