Energy costs: Manufacturers face biggest rise in bills this winter

Manufacturers are among the industries most affected by rising electricity and gas costs, with the average business set to see bills increase by over £2,000, according to new research.

The energy bills insight, conducted by data and AI leader SAS, analysed ONS data from more than 1.7 million business-owned buildings to understand how much gas and electricity each sector consumes on average. 

Over the last two years 77% of businesses admit they have increased the prices of products and services due to high energy costs, with some even facing insolvency.

While wholesale energy prices have decreased since 2022 and 2023, when the previous government introduced the Energy Bill Relief Scheme, the base rate for both electricity and gas for businesses has still risen this winter compared to summer prices, and rates remain high due to ongoing global factors.

Manufacturers operating in factories are expected to see the biggest jump in energy costs, with an estimated combined gas and electricity bill of £20,057 per month, per factory - a jump of £2,180. The heavier consumption can be due to activities such as the extra heating, cooling and chemical processing required to manufacture certain items.

Buildings used by emergency services are the second most affected by rising energy costs, with businesses facing an increase of more than £1,200 for gas and electricity, bringing the average total to £12,000 per building. The industry's need to operate 24/7 and keep spaces heated for staff and patients during colder months is likely to be one of the contributing factors behind the rise.

The retail industry is set to be third on the list, despite already struggling with soaring rents and the closure of more than 2,000 high-street stores, with an estimated rise of around £660 per building and a total monthly bill of £7,440.

While industries like hospitality are still likely to see a rise in energy costs, it’s a more modest rise per business.

Industries facing the biggest increase in their energy bills: 

Duncan Bain, Senior Energy Advisor at SAS UK & Ireland, said:

"The energy crisis has placed significant pressure on businesses, forcing many to navigate the challenge of rising costs amidst constrained budgets - and unfortunately this could lead to some facing administration or liquidation."

“While it’s understandable that some may worry about increased energy bills, the impact will vary widely, based on business size and consumption patterns. Our research sheds light on the projected energy costs for businesses this winter and underscores the importance of leveraging technology to monitor and optimise energy use, since it’s not clear when prices will stabilise after the volatility of the last few years."

“That said, these findings only represent industry averages – businesses will face higher or lower costs depending on their operational needs and energy efficiency measures."

Readers can see the full report here.

ENDS

Methodology

SAS took the data from the Non-domestic National Energy Efficiency Data-Framework (ND-NEED) 24 (England and Wales), published on 9 August 2024.

It then took data from the sheet based on non-domestic electricity consumption by building use, and took the most recent use, in TWh, before converting it to kWh. It then looked at the number of buildings by industry, and found an average kWh per year and per month, by industry, for both electricity and gas.

To understand how prices may fare in winter 2024, SAS took the new unit rates for electricity and gas before comparing them with the units in September 2024, to understand how each sector could fare.

Data correct as of October 2024.