The UK's energy market is undergoing rapid change, as clean power moves from ambition to reality. While businesses have become accustomed to understanding and managing the volatility of commodity prices, rising non-commodity costs - such as the policy, system, and network charges applied to business invoices - now represent a more pressing challenge.
Our latest Business Energy Tracker: The cost of clean power: will your business pay the price?, shows that many businesses accept that funding the clean energy transition is part of their responsibility, and the benefits it can bring in terms of stability and sustainability.
The Tracker also outlines the scale of the issue. It identifies energy as the top risk businesses face for the fourth year running, with a huge 97% concerned about the financial impact of the low-carbon transition.
This is having a major effect on confidence and competitiveness. More than half (54%) of large energy users surveyed said energy prices are having a negative impact on business confidence.
Looking more specifically at non-commodity costs, half believed that the amount of charges and levies they were expected to pay were unfair.
The report also revealed that there were varying opinions on how much these costs could increase over the next few years, with answers ranging from less than 10% to more than 75%.
In response to this uncertainty, we have developed a new tool for businesses, our Energy Cost Calculator. This is designed to help organisations understand how rising non-commodity costs could affect their energy invoices.
Combatting the risk of rising non-commodity costs
Our Energy Cost Calculator provides businesses with a snapshot of their future non-commodity costs, based on their business sector and annual energy consumption.
Developed using data from our award-winning Optimisation Desk, in just 60 seconds, the Calculator provides a clear, data-driven picture of the potential increase in non-commodity costs that a business could face.
The tool is supported by a team of experts who can help organisations put strategies in place to take control and manage risk through measures such as energy efficiency, demand management, and on-site generation.
I would encourage all business and energy leaders to use it, as it can also help support net zero strategies now and in the future.
The rising cost of clean power for your business - are you prepared?
The transition to clean power is an absolute necessity. However, our Business Energy Tracker shows that rising non-commodity costs simply can't be ignored. They're growing faster than the cost of energy itself and will play a major role in shaping business budgets over the coming years.
It's imperative that businesses understand the extent of these increases in order to put strategies in place that will reduce their impact, and our Energy Cost Calculator is designed to do exactly that.
But, they also expect fairness in how it is managed. We're ready to work with the government to ensure that businesses receive the right support to help them remain competitive.