Research conducted by Energy Systems Catapult on behalf of the smart energy platform carbonTrack, has revealed that small and medium-sized enterprises (SMEs) based in the West Midlands have seen their energy bills increase by between 167 and 500%.
According to the Back from the Brink: How SMEs are taking control of their energy management and why extra support is needed report, this crippling increase in bills is due to both rising inflation rates and unprecedented energy bill increases.
“It’s been an utter shock, any business cost that more than doubles overnight without negotiation is always going to be difficult to swallow,” said managing director of Midlands-based, JCM Fine Joinery.
To help mitigate the effect of price rises for non-domestic energy users the UK Government launched the Energy Bills Discount Scheme (EBDS) in April 2023 which was extended in May to broaden its support to include “businesses that provide critical national infrastructure.”
However, the report found that 71% of businesses interviewed expressed concerns over the effectiveness of the scheme.
For instance, this spring has seen gas and electricity prices fall bellow the baseline threshold set by the EBDS which puts electricity at a price threshold of £302/MWh and gas at £107/MWh – this means that businesses may not benefit from the scheme at all.
In a bid to mitigate the rising costs of energy, 71% of SMEs conducted studies investigating onsite consumptions, whilst 43% engaged academic institutions to look at energy efficiency solutions.
Renewable energy generation technologies are becoming increasingly more attractive options with 86% of the SMEs surveyed exploring the potential for solar deployment so that they might generate their own cheap solar energy.
In the wider conversation of net zero, the report found that 71% of businesses saw cost as a significant barrier to decarbonisation and 57% felt the UK Government had not given companies sufficient financial support to help manufacturing businesses in particular, reduce their carbon footprint.
“The West Midlands is a thriving hub of innovation and manufacturing excellence. Rising energy bills are increasingly posing a threat to businesses in the region as demonstrated by the interview findings. We are witnessing more and more SMEs looking to take back control of their bills by engaging with third parties, implementing internal energy management policies, or by deploying renewable generation technologies and energy efficiency improvements on site,” said Reace Edwards, business modelling consultant at Energy Systems Catapult.
“The businesses we interviewed are however, looking to the government for more financial assistance to ensure they can weather the storm. Not only would this aid them in paying their bills, but it would make decarbonisation a cost-effective option for SMEs in our region. We cannot decarbonise while the cost of doing so for these businesses remains at a record high.”
