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When Will My Business Energy Prices Drop?

Britain has been facing an energy crisis since the autumn of 2021. As a result, businesses of all sizes have been forced to close, with many still struggling to keep on top of their energy bills.

While wholesale prices may have lowered somewhat throughout the start of 2023, business energy prices are still much higher than they were pre-autumn 2021.

In this guide, we’ll explore when you can expect business electricity costs to drop significantly, as well as everything you need to know about the Energy Bill Discount scheme.

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Why are Wholesale Energy Prices Dropping?

Wholesale energy prices have started to lower in 2023 thanks to several reasons, including:

Mild winter

The U.K. had a relatively mild winter over 2022/2023, which definitely helped manage our limited gas and electricity resources. There was a cold snap in December, but we never experienced any long-term snowfall or severe temperature drops. This ensured that there was enough energy to go around.

With less demand, energy prices steadied somewhat. While prices remained high, there was no need to increase the cost to spread the energy around more evenly.

This mild winter has had a positive effect on energy resources for the rest of the year, which has helped keep prices somewhat steady throughout the first half of 2023.

If we had experienced a severe winter, this would not have been the case.

Energy-efficient homes and businesses

Many business owners took on initiatives to make their workspaces more energy efficient over the winter of 2022/2023. These initiatives included installing insulation and double-glazed windows and also curbing energy usage throughout offices.

Helped by the mild winter, many businesses became more efficient and didn’t need large quantities of energy. Many have continued to support these initiatives, resulting in a higher number of efficient workspaces than ever.

Less demand for energy has helped lower the price of wholesale energy.

Development of the Russian invasion of Ukraine

Initially, the Russia-Ukraine conflict caused severe issues for energy supplies. Particularly because Russia cut off Nord Stream 1. This was a vital pipeline that passed through Germany that supplied a lot of Europe with gas. The loss of this reduced gas supplies throughout the entire continent, resulting in increased gas prices.

Since then, alternative gas supplies have been found. For example, many European countries have opened storage facilities and filled them with natural gas. These resources have created some degree of energy price stability.

How Much Are Wholesale Energy Prices Right Now?

According to Ofgem‘s wholesale market indicators, the current wholesale energy prices are as follows:

  • Wholesale gas – 137p per therm* (around 29 kWh)
  • Wholesale electricity – £145 per MWh* (1,000 kWh)

This is the price that energy suppliers pay for gas and electricity. Your energy supplier will then charge you a wholesale rate based on how much electricity and gas you use.

Business Energy comparison

But how does the wholesale energy market affect business electricity and gas prices?

Your business utility rates depend on the amount of energy you use. It also depends on the size of your business, as well as what company you receive your gas and electricity supply from.

Here’s a rough overview of the latest business energy rates for a medium-sized business:


Annual usage: 30,000 to 65,000 kWh

Unit price (per kWH): 16.2p

Daily standing charge: 179.6p

Annual cost: £8,350


Annual usage: 25,000 to 55,000 kWh

Unit price (per kWH): 34.6p

Daily standing charge: 102.5p

Annual cost: £14,214

Design Elements

What Causes Energy Price Volatility?

Business electricity and gas prices have been so volatile recently due to the effects of major global events. Namely, the Russian invasion of Ukraine and the COVID-19 pandemic has caused energy supply and demand issues.

During the pandemic, there was a large demand for gas and electricity, but supply levels couldn’t stretch far enough. So, prices were driven up and then driven down as the pandemic developed. Clearly, major events cause serious volatility when it comes to energy prices.

Supply shortages make it difficult for business electricity suppliers to buy gas and electricity in the first place. If they have to pay more for wholesale gas and electricity, they’ll drive up business electricity prices by however much is necessary to cover the price hike. Prices will then be lowered as supplies are made available.

The world has gone through a lot since 2020, which has caused major volatility in the energy price market.

What is the Energy Bill Discount Scheme?

The Energy Bill Discount Scheme is the latest initiative introduced by the UK government to help businesses deal with excessive energy prices. As it stands, this scheme is set to run for 12 months. It started on April 1st 2023 and is set to end on the 31st of March 2024 – although, this could be subject to change. It replaced the government’s former initiative, the Energy Bill Relief Scheme.

The Energy Bill Discount Scheme is designed specifically for non-domestic use. I.e., businesses, voluntary sector industries, and public sector organizations.

Discount eligibility depends on the price contract you are on – you can check on the Gov.UK site for more information.

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Why Are Renewable Energy Prices So High?

Renewable energy prices are unfortunately still tied to gas prices. All energy prices are tied to a system known as “marginal cost pricing”, which causes the price of the most expensive energy source to set the price for all energy sources. So, the volatility of gas prices has caused volatility in all other energy types – renewable energy included.

It doesn’t matter if gas is high in demand but renewable energy is not – the price of renewables will go up, too.

So, renewable energy prices are currently high because gas prices are high.

Design Elements

Will Energy Prices Go Down in 2023?

It’s impossible to say whether or not business electricity and gas prices will go down for good in 2023, as the market remains highly volatile. There have been positive signs so far throughout 2023, but all that could change by wintertime. A difficult winter could drive prices up to exponential levels.

It appears that the experts, too, are still doubtful whether or not prices will go down in 2023. Take the Energy Bill Discount Scheme for example. The government have set the end date for this scheme in springtime 2024, suggesting that they don’t see energy prices going down and stabilising in 2023.

Compare Business Energy Prices With Business Energy Comparison

Whether or not business electricity bills will go down, you could find yourself a better energy deal for your business with the help of Business Energy Comparison. Instead of going through all the business electricity supply deals available to you, you can perform a business electricity comparison on our website.

We’re connected with the UK’s leading business electricity supplier companies and are dedicated to finding businesses of all sizes the best tariff for their needs.

Whether you own a small, medium, or large business, you could be paying over the odds for your gas and electricity usage. If the energy crisis worsens in 2023, staying with your current provider could turn out to be your biggest business mistake. If you switch now, you could safeguard your business against the potential of increasing energy prices.

Compare business electricity prices today, and allow our brokers and consultants to link you up with the best energy deal.

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Final Thoughts

Energy prices may drop for good in 2023, or they may not – this remains unclear. The market remains volatile and business gas and electricity prices could really go either way.

Luckily, the Energy Bill Discount Scheme has been introduced to protect businesses against seriously high business electricity rates. However, it does not protect you against paying too much for your business tariff.

Switch business electricity and gas today with Business Energy Comparison to keep your energy prices manageable, whatever happens.

Frequently Asked Questions

Should I fix my business energy price until 2024?

You should only fix your business energy price if you find a deal better than your current variable one. Given that energy prices will likely remain volatile until at least 2024, it may be a wise decision to fix your energy prices. At least this way, you’ll know exactly what you’re paying from month to month.

Will business energy prices ever be capped?

Business electricity tariffs are not the same as domestic electricity prices and are not capped by any government initiative. Instead, a discount is offered through the Energy Bill Discount Scheme.