Three Quarters Of Businesses Say Energy Is Now Their Top Risk, As Volatile Wholesale Markets Hit Industry Hard

A city landscape at night, with all the buildings illuminated ● 77% of organisations say energy is now their biggest business risk

● 82% believe Government needs to do more to protect businesses from wholesale market volatility

● Almost half of businesses believe the current energy crisis will harm net zero progress

Energy costs have overtaken the recovery from Covid-19 as the top concern for UK businesses, according to a new report, with industry urging Government to do more to help them navigate the current energy crisis.

The report from npower Business Solutions (nBS) - Business Energy Tracker - asked 200 large organisations about the impact of the energy crunch on their confidence to invest in decarbonisation and other measures, as well as how they are managing energy risk.

The research showed that 77% of businesses say energy is now their biggest concern, followed by the ongoing recovery from Covid-19 (72%). With nine out of 10 predicting the cost of energy to their business will increase over the next 12 months. 80% of businesses reported that energy is now a major board-level issue.

Businesses are now urging Government to respond with measures to protect them from the impact of the energy crisis. A huge 82% of businesses believe more needs to be done in terms of policy and incentives, and within this, one in five (21%) currently believe nothing is being done at all.

Anthony Ainsworth, Chief Operating Officer at nBS, comments: “Businesses are currently facing huge challenges, and are emerging from two years of upheaval into even more uncertainty. Rising inflation, the reduction in government pandemic support and increased energy market volatility are all having an impact on confidence.

“While some progress has been made, the message coming through loud and clear from this research is that current policy is not doing the job it needs to do to support businesses at a time when energy is their biggest concern.

“What we are hearing is that certainty and with it, investor confidence, is in short supply.”

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The report also showed that businesses are taking a proactive approach to combat the current crisis by increasing their own resiliency. More than half (55%) say that sustainability measures, such as energy efficiency and energy management, would be their most important investment priority over the next 12 months.

Anthony Ainsworth continues: “While it is encouraging to see that many businesses are being ‘masters of their own destiny’, we also need to see strong leadership in government to grasp the nettle of challenging but important change that could radically alter the way industry interacts with energy in Britain.

“For example, we need to double down on action that can have an impact now. Reducing energy demand through energy efficiency and electrifying heat and transport where possible are relatively quick wins.”

The Business Energy Tracker also asked businesses about their attitudes towards net zero. Nearly half (49%) believe that the current energy crisis will harm progress and, while two thirds (67%) believe that net zero by 2050 is achievable, nine in 10 (93%) businesses were concerned about the potential cost impact of funding the low-carbon transition on their business.

“While businesses are navigating multiple pressures and increased costs, we are also being warned that the next ten years must be a ‘decade of delivery’ when it comes to climate change and hitting our net zero emissions target by 2050.

“This research shows that businesses back net zero, and they recognise the environmental, commercial and reputational benefits it can bring, However, the current pressures mean that confidence is starting to wane. If the Government wants to keep the support of businesses to help them achieve their net zero targets, then they need to intervene now with policies to support them.”