Energy giant NPower today confirmed it is to increase its electricity and gas tariffs as record oil prices led to an increase in wholesale energy bills.
Analysts predicted other energy providers would follow suit as energy prices continue to climb.
The move comes as the weak dollar and violence in Nigeria and Pakistan combined to push oil prices past the $100 a barrel mark earlier this week.
Terry Coles, co-manager of investment bank F&C's Global Climate Opportunities Fund, said that he expected prices to "tail off slightly", but added that "long term, there is a widely held view that the price of oil is likely to be higher than analysts were forecasting".
Relatively small contributors like Nigeria, which supplies just four per cent of global oil have had a huge impact on oil price showing really tight supply relative to demand, he explained.
The increased energy prices will spell bad news for firms already concerned about the prospect of a global economic downturn, but green business leaders and investors argued that there was a silver lining in the boost higher energy prices will give to renewables and energy efficient technologies.
"As oil prices rise, the whole investment and business case for renewables is strengthened," observed Coles. "Not only does it bring the cost of renewable energy closer to that of conventional power the sector is also less likely to face future regulations and penalties."
Investments in energy efficiency also become more attractive as energy prices climb, according to Michael Rea, chief operating officer at the Carbon Trust. " With oil prices almost doubling in the last twelve months, energy efficiency has become a mainstream operational issue for many businesses as they fight to reduce costs as well as show action on climate change," he argued.
However, Renewable Energy Association (REA) chief executive Philip Wolfe said that cost pressures alone would not deliver the scale of renewable energy investments required to decarbonise the economy and as such "a realignment of regulatory and policy measures" was also required to drive growth in the sector.
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