New energy cost forecasts predict that market volatility and rising ‘non-commodity’ charges mean medium to large energy users could face up to a 50 per cent price hike by 2020.
The forecasts, published by energy consultancy Inenco, also predict that energy prices could more than double by 2032 compared to 2016 levels.
Looking at how possible scenarios over the next 15 years could affect medium, large and industrial energy users, Inenco’s research shows that businesses face continued upward pressure on energy prices.
Market spikes, Brexit, relief schemes…
In the short term, firms could face more than 10 per cent increase in the total cost of energy this winter compared to last year due to a spike in wholesale energy prices and an increase in some indirect charges on energy bills.
By 2020, costs could be compounded by potential currency fluctuation caused by the outcome of Brexit and the planned increase to the Climate Change Levy.
Plans to offer more energy cost relief to the largest industrial energy users will also shift costs to smaller firms. Smaller energy users could find themselves paying 65 per cent more for each unit of energy compared to the energy-intensive companies benefitting from relief.
Looking even further ahead, other factors like the uptake of electric vehicles could increase costs still further.
‘Re-assess your risk’
David Oliver, senior energy consultant at Inenco, said businesses should respond with more aggressive energy efficiency strategies.
“This is the tenth successive year of price rises for business energy users and whilst the ‘low hanging fruit’ of energy efficiency may have already been picked, there is still more that organisations can do to reduce costs”, he said.
“It has never been more important for businesses to re-assess their energy risk management strategies to consider how to mitigate rising costs, from demand management to building a business case for capex investment in new technology.”