How will you protect your business?
Plunkett is acutely aware that the major, and worsening, issue around energy costs constitutes a critical challenge for community businesses nationwide. We have, unsurprisingly, heard from a number of Plunkett members about energy price increases at the end of fixed tariffs that will prove extremely challenging to cover. For some businesses, the increases may even threaten their survival.
We know that many community groups are already taking action to reduce costs across their businesses to mitigate some of the impact of the upcoming price rises. This kind of proactive planning will prove essential with the onset of winter and the unknown levels of price increase to come. We would advise all businesses to be aware of the terms of their current energy deals and, particularly, the end date of fixed rates. Even if you have some time to go on a fixed rate deal, planning and budgeting for the forthcoming changes is critical.
In this blog post, we will share six ways that your community business can tackle the energy price crisis…
1) Ask the experts…
Warwick based business utility consultancy Utility Stream help local and national businesses manage their utility needs – they are one of Plunkett’s recommended suppliers and supporters, with a strong understanding of small businesses. They have given us some tips for all members to think about:
- What’s happening to gas and electricity prices?
Over the last 12 months there’s been a 4 fold increase in wholesale prices. This has been driven by many things but broadly it’s a function of supply and demand – impacted by considerable uncertainty. The Russian invasion of Ukraine is the main reason as gas supplies have been reduced into Europe; compounded by increasing global demand (Especially in Asia) post Pandemic.
The UK is very dependent on natural gas for generating electricity and that’s why prices are so volatile.
Most analysts don’t expect to see prices return to pre-energy crisis level for several years. This is because it will take time for the UK to increase its own generation capacity and for the market to re-structure.
- What can I do to protect myself?
We encourage businesses to start planning as soon as possible. It’s vital to avoid being ‘out of contract’ and whilst prices are high there’s little sign of them reducing which means business should protect themselves against potential further increases by agreeing contracts in advance.
Make sure you know exactly when your current contracts expire.
Even if your current contract doesn’t end until 2023 or beyond it’s essential to start budgeting for a significant price increase.
- How can I reduce my utility spend?
Monitoring and targeting where you use gas or electricity is important. Depending upon the overall consumption, business should consider deploying energy monitoring software to target a reduction in consumption.
Energy efficiency is vitally important and businesses can help reduce their overall consumption through ensuring they have adequate insulation and have temperatures set appropriately.
In addition, most businesses aren’t aware that you can switch commercial water suppliers; this usually delivers contract savings of c. 20%.
If members need help to negotiate new energy contracts, Plunkett’s recommended suppliers Utility Stream and Energy Action Group can help.
2) Energy monitoring
Could there be an appliance in your business that is costing more to run than the profit it is generating?
One Plunkett member community shop shared with us that they had invested in an energy monitor to measure the consumption of each of their fridges, chillers and freezers, as recommended by Utility Stream. As a result, the open-fronted fruit and veg chiller proved to be prohibitively expensive, accounting for 11% of the total electricity usage, so they switched it off and made alternative arrangements for displaying fresh products that needed to be chilled.
3) Invest in new and more efficient technology
In 2020, the team at Farmborough Community Shop (Gloucestershire) decided to launch an initiative to improve the energy efficiency of the shop. They replaced inefficient electrical equipment and installed solar panels, raising the funds needed through community pledges and grant applications.
Phil Gray, Treasurer to Farmborough Community Shop said at the time, “The installation of the solar PV panels…has surpassed our expectations. Our original calculations indicated that we would reduce our annual electricity bill by £550, but the operational figures show that the panels have exceeded this in just over six months of use”.
Read more about Farmborough’s story on their website.
If you feel inspired to go for a similar project, the Energy Savings Trust has summarised the wide range of national and local grants, funding, and loan schemes available to businesses to improve energy efficiency; from boiler upgrades and other low carbon solutions, to energy audits and renewable energy projects.
4) Sector representation
As you would expect, Plunkett is working hard behind the scenes with partners across the sector to represent the interests of all community businesses at a national level. We hope this advocacy work will influence central government policy and direction in terms of assistance and support for the community business network through these extremely tough times. Consider becoming a Plunkett Community Business Member or Supporter to help us champion the sector.
5) Online networking
Come to what promises to be an unmissable FREE Community Business Forum session, ENERGY! Tackling the Price Crisis on Thursday 20 October from 10-11am. Industry experts, Gaeltel, are working in partnership with Plunkett to conduct an energy survey of two community businesses and will share their findings and recommendations for minimising energy consumption and making cost savings. We hope you will join us for this practical session that could have a real impact on your bottom line. Register your place on eventbrite.
6) We’re here to help!
In the immediate term, and very importantly, Plunkett is here to help with practical business support and advice. If you need to talk through cost cutting measures, understanding financial forecasting, boosting sales or any other mitigating actions to help deal with the energy price rises, do please get in touch. It’s important to shout before things get to crisis point so we have the best chance of assisting.
