With the conflict in the Middle East raising oil prices and threatening to push inflation higher, businesses are once again worried about the cost of energy.
Spiralling oil, electricity and gas prices aren’t exactly a new concern. Recent data from the CBI and Energy UK shows just how big the problem is, with nearly 90% of businesses reporting rising bills over the past three years (and that’s from data taken before the conflict in the Middle East started).
The price of energy is always a risk because it is something largely outside of any company’s control. What can be controlled, however, is whether a business is paying more than it should and how much energy it is using. That is where the right advice and support can make a real difference. For some businesses, government schemes may be available that reduce energy costs. For others, the biggest opportunity may lie in better understanding energy use and putting a plan in place to reduce it. In this article, we look at these two main ways of helping businesses to regain control over their costs during market volatility: by ensuring they are not paying more for energy than they should, and by better understanding their consumption through sustainability reporting.
Making sure you are not paying more for your energy than you should
While businesses can’t control the things that affect energy prices, they can make sure they buy and use energy as efficiently as possible.
The cost of your energy bill is not just about the wholesale price of gas and electricity. Business energy bills also include non-commodity costs, which are extra charges linked to things like environmental obligations and energy infrastructure projects. Not every business should be charged every cost, so understanding exactly what charges apply to your business can help you avoid paying more than you should.
Eligible energy-intensive businesses can also take advantage of government energy tax relief schemes designed to reduce non-commodity costs on energy bills. These include the Energy Intensive Industries (EII) exemption, Climate Change Levy (CCL) exemption, and compensation linked to the UK Emissions Trading Scheme (ETS) and Carbon Price Support (CPS).
Most of these schemes are aimed at energy-intensive manufacturers, particularly those operating in sectors such as aluminium, glass, chemicals, paper, steel and recycling, where energy makes up a huge part of overall costs.
For businesses that qualify, these schemes can make a big difference to overall energy costs.
Our advice: If you operate in energy-intensive manufacturing sectors, your first step should be an audit of your non-commodity costs to make sure you’re being accurately billed by your energy provider. Your second step should be to see if you’re eligible for any of the available exemption and compensation schemes.
Find out more: Non-commodity charges for 2025 and beyond: What to expect
Why sustainability reporting matters
At its simplest level, sustainability reporting documents your carbon emissions, helping you to understand how you can optimise your energy usage. This is important because the best way to control the amount you’re paying for energy is to reduce your consumption. Put simply, the cheapest kilowatt hour is the one you do not use.
Getting a clear picture of your energy use can be especially handy if consumption within your business isn’t static. For example, hotels, leisure facilities, and sites with large car parks or extensive lighting can see energy demand rise and fall depending on their operations.
Sustainability reporting can also support wider business growth goals. For example, most government bodies now ask for carbon emissions reporting if you want to win or maintain a procurement contract. If you as an organisation want to ensure you are winning those contracts and working with those partners, having a report in place is a huge advantage from a sales perspective.
Understanding your carbon footprint can also be important for winning investment. Investors now commonly expect businesses to have a strategy around reducing their emissions. If you don’t have a plan in place, you may find that you are ruling yourself out of consideration.
For many organisations, sustainability reporting is also a matter of compliance. Schemes like the Energy Savings Opportunity Scheme (ESOS) and Streamlined Energy and Carbon Reporting (SECR) requirements mean that qualifying businesses must report on their energy use and emissions. The upcoming ESOS Phase 4 also puts a much greater emphasis on showing that you have a real action plan in place to reduce your emissions, along with being able to show that you’ve made progress since your last energy assessment.
Our advice: Treat sustainability reporting as a competitive advantage for your business instead of just a regulatory requirement. When you know where and how much energy you are using, you can take meaningful steps to reduce your consumption, putting control back in your hands.
Find out more: How to turn carbon reporting and compliance into a competitive business advantage
How Leyton can help
While Leyton UK is best known for successfully helping businesses claim R&D tax incentives, we also offer specialist energy advice and support.
One major challenge for our clients right now is a lack of resources to track their energy usage, alongside a sharp increase in energy costs thanks to global tariffs and significant turbulence in both Ukraine and now again in the Middle East.
But we’re here to help. Our team provides end-to-end support to ensure you aren’t paying a penny more than you should. We’ll also review your eligibility for compensation schemes as well as help you apply.
We do all the hard work and solve problems for businesses, so we handle the hard parts: managing the administrative burden with the Department for Business and Trade and pushing energy suppliers to actually change your bills.
We also support businesses that want to better understand their energy use and carbon emissions, particularly when internal resources are stretched.
If you’d like to have a chat to see if we can help your business gain more control over its energy bills, we’d love to help. Get in touch to find out more.
