In recent years, UK businesses have faced an increasingly turbulent energy landscape. From geopolitical tensions to shifts in supply chains and growing demand, price volatility in the energy market has emerged as a significant threat to business stability.
For many companies, market price fluctuations aren’t just a budgeting inconvenience; it’s a genuine threat to long-term security and competitiveness.
The problem: How volatility impacts UK businesses
Energy is no longer a background cost; it’s a strategic risk. With gas and electricity prices surging unpredictably over the past couple of years, companies across the UK have struggled to forecast expenses, manage operational costs, and protect their profit margins.
A survey conducted by the British Chambers of Commerce found that nearly half of UK firms reported energy costs as a major concern, and a significant number admitted they had no strategy in place to mitigate rising prices.
Key challenges include:
- Budgeting uncertainty: Businesses find it difficult to plan annual budgets when energy prices fluctuate, as they don’t know how much money will be going towards future bills.
- Cash flow stress: Smaller businesses with tight margins are especially vulnerable, as sudden spikes in energy costs can wipe out profits.
- Contract confusion: Many companies are locked into fixed-term contracts negotiated at peak market prices, while others remain exposed to variable rates that offer no price protection.
- Supply chain instability: Volatile prices affect not only direct costs but also suppliers and partners, which can amplify disruptions.
What’s causing the volatility?
Several factors contribute to the UK's energy price instability:
- Global market forces - such as the war in Ukraine and LNG supply routes. This causes a strain on the market and therefore pushes energy prices up.
- Domestic energy policy uncertainty - including delayed investments in renewables and the slow rollout of energy infrastructure.
- Weather and seasonal demand - which increasingly affect both supply and consumption patterns in unpredictable ways.
How businesses can regain control
While businesses can’t control the market, they can take proactive steps to reduce their exposure and increase resilience. Here are some practical strategies:
Energy Procurement Strategy
Rather than reacting to market spikes, companies can develop a structured energy procurement plan. This may include:
- Fixed or flexible contracts tailored to consumption patterns.
- Market tracking to buy at favourable times.
- Group purchasing or energy aggregators to increase buying power.
Investing in energy efficiency
Energy efficiency measures can significantly reduce consumption, thereby mitigating the impact of high prices. This includes:
- Upgrading equipment and insulation.
- Implementing smart energy management systems.
- Conducting regular energy audits.
On-site generation and renewables
Installing solar panels, battery storage, or combined heat and power (CHP) systems can provide long-term price stability and reduce reliance on the grid. Government incentives are also available to support these investments.
Engaging with energy consultants
Specialist consultants can help businesses navigate complex markets, forecast trends, and secure better deals. This often unlocks savings that internal teams might miss.
A call for confidence and preparedness
The UK energy market is not going to settle into predictability anytime soon. But with the right strategies in place, businesses can move from reactive to resilient. Confidence in the face of volatility comes not from hoping for stable prices, but from planning for instability. Those who prepare will not only weather the storm but may find competitive advantages in a market where others struggle.
If you're looking to save money on your energy bills then why not get in touch today? The relationships Resolve Energy has developed with over 24 of the UK’s biggest business energy suppliers allows our energy experts to source the best business energy rates available for your company right when you need them. Request a free quote today and start saving money on your energy.
