UK Electricity Prices Double in a Year

Wholesale electricity prices have doubled over the past year, peaking at £82.75 per MWh on 24th June. Current supply-demand tightness has cemented in high oil prices which, in turn, has driven a substantial price increase in electricity and gas markets. Furthermore, the sterling is down, causing UK imports to be subject to high levels of inflation. UK Allowances have bounced back after a short dip and are projected to rise further, driving increasing rates in the UK energy markets. Current forecasts suggest a further 9% increase in electricity rates for winter 2021.

In addition to wholesale prices, non-commodity charges have seen annual increases of between 6-8% recently. These charges account for up to 60% of a typical energy bill and with green tax charges such as the Climate Change Levy (CCL), Renewables Obligation (RO), Contracts for Difference (CfD) and the small-scale Feed-in Tariff (FiT), driven by the government’s commitment to decarbonisation, current projections suggest a continued rise.

For British business owners, this will be a great cause for concern. Over the years, energy prices have driven UK overheads to levels greater than 50% of that seen in European industry. This disparity in pricing makes it much harder for UK businesses to remain competitive in global markets. This outlook may seem worrying; however, action can be taken to mitigate risk from future volatility. Solar power is at a current low, allowing organisations to secure renewable power over the next 25 years for the equivalent of 2-3 pence per kWh. Green tax reduction schemes also play a large part but claims must be correctly maintained and managed to ensure compliance and retention of the exemption. This can be difficult for new participants to the scheme, however, we manage and maintain full scheme eligibility for our clients to secure and maximise green tax savings – we have saved around £240,000 a year for a well-known PLC. 

Our team has extensive experience in achieving substantial energy savings for clients. If you are worried about the current outlook and would like advice on energy efficiency optimisation, renewable generation or green tax savings, please click on the button below to get in touch with a member of our team.