The energy crisis is hitting small businesses in the UK hard, causing many to worry about their future. The rising cost of gas and electricity is putting a huge strain on places like pubs, restaurants, and small shops. According to Cornwall Insight, a research group, these businesses are paying over £5,000 more per year on their energy bills than they did before the crisis started in 2021.

Higher Bills Expected for Next Year: From next April, an average small business can expect to pay around £13,264 annually for electricity. This is a 70% jump from the £7,811 they were paying before the energy crisis. These costs are expected to continue rising as standing charges increase and gas prices remain volatile due to ongoing tensions in Ukraine.

The issue started in 2021 when wholesale gas prices began to climb. Things got worse in 2022 when Russia invaded Ukraine, sending gas prices soaring. At the peak, some businesses were facing energy costs above £20,000 a year. Although prices have come down slightly, typical bills are still hovering around £13,170, which is far higher than before the crisis.

Government Urged to Act: Experts and business owners are calling on the government to step in and help. Unlike households that have a price cap on their energy bills, businesses do not have such protections. This means many are forced to lock in high rates for at least part of their energy needs, leaving them exposed to market changes.

Craig Lowrey, a principal consultant at Cornwall Insight, said, “The household energy price cap offers some protection, but businesses don’t have that. With consumer spending down and the high street struggling, the government needs to think seriously about helping businesses manage these high energy costs if they want to avoid more closures.”

Last year, the government did offer some help by subsidizing energy bills for both households and businesses, but that support ended in April 2023. Now, with the government focusing on fixing a £22bn budget gap, new support for small businesses seems unlikely.

Long-Term Solutions Needed: Lowrey believes that boosting domestic energy production is the only way to achieve lower, more stable energy costs in the long run. He pointed out that this won’t be a quick or easy fix, but it’s crucial for future stability. “Increasing our own energy production can reduce our dependence on international markets and disruptions, which should help bring down costs over time,” he said.

Businesses Making Adjustments: Many businesses are trying to adjust and find ways to lower their energy use. For example, Dreadnought Tiles, a 219-year-old tile factory in West Midlands, has already taken several steps to manage its high energy costs. The company operates nine kilns at extremely high temperatures, producing thousands of tiles and bricks daily. To cut down on energy use, they have introduced “micro-metering” equipment, which allows them to closely monitor how much energy each kiln uses. They’ve also worked on improving the kilns’ thermal efficiency.

Alex Patrick-Smith, the executive chair of Dreadnought Tiles, said, “Our energy bills have more than doubled since the crisis began. Last year, we had to cut production and increase prices. I don’t think we will see energy costs return to what they were before the crisis; they’re likely to stay higher and rise again this winter.”

Patrick-Smith is also considering installing solar panels on the factory’s roof to generate some of their own electricity. However, he notes that much of their ability to make changes depends on government support and grants for green energy projects. “We’re exploring new technologies, but with changes in government, there’s uncertainty about the future of these schemes,” he added.

A Call for Action: With energy costs showing no signs of dropping, many small businesses are at a breaking point. They need clear and strong support from the government to survive these challenging times. Whether through new subsidies, grants for green energy, or other measures, action is needed to prevent more businesses from closing their doors.

Without intervention, many small businesses fear they won’t make it through another winter of high energy costs. The situation highlights the need for both short-term relief and long-term solutions to ensure businesses can thrive and continue contributing to the UK’s economy.