Firms brace themselves for energy bill spike

The financial case for investing in energy-saving technologies and business models is expected to strengthen significantly as many firms face up to a potential doubling in their power bills.

To date, businesses' longer-term energy contracts have insulated them from the price hikes that have hit domestic customers this year.

However, around half of the UK's small and medium-sized businesses are entering negotiations for their annual energy contracts, which are due to expire this October.

Experts are predicting that with wholesale electricity prices for this winter having more than doubled in the past year to around £90 per megawatt hour, they can expect a big rise in energy costs.

According to yesterday's Sunday Times, a number of companies have already seen their energy bills more than double. One chain of small car dealers in Yorkshire saw its electricity bill jump from £30,000 to £60,000 and one car parts manufacturer in Manchester said its energy bill had climbed from £70,000 to £160,000 in the past year.

Speaking to BusinessGreen.com, Simon Briault of the Federation of Small Businesses said that firms should shop around to find the best energy deal and avoid long-term deals that locked them in to one supplier.

He added that the increase in energy costs would strengthen the case for investment in greener technologies and business models.

"For some businesses, an increase in their bills will be inevitable, and from the green perspective it is a happy coincidence that saving money is also green, " he said.

However, Briault warned that the slowdown in consumer spending would make it harder to pass on higher energy costs to customers and many small firms could struggle to finance energy efficiency without greater support from government.

"The government needs to be getting the message across that green measures save you money, and offering more incentives to help firms install insulation and other measures that reduce energy use," he said.