Business energy bills forecast to stay 70% above pre-crisis rates

Cornwall Insight’s newly launched Business Energy Cost Forecast reveals a significant increase in energy expenses for small businesses, such as pubs, restaurants, and independent retailers. According to the forecast, these businesses are now paying over £5,000 more annually for energy compared to pre-energy crisis levels. As contracts renew in the April 2025 – March 2026 period, bills are expected to rise even further, with average electricity costs projected to reach £13,264—70% higher than in 2020-2021.

The report emphasises that, despite some stabilisation in energy prices in recent years, costs remain substantially elevated compared to the £7,000 to £8,000 range typical before 2021. This trend is anticipated to continue into 2025 and likely beyond.

While wholesale energy prices have decreased since their peak during the 2022-2023 crisis—when annual electricity bills for small businesses could exceed £20,000—the market has not fully recovered from the lingering effects of the crisis and the geopolitical tensions stemming from the Russian invasion of Ukraine.

This, coupled with a slight rise in standing charges, is expected to push business energy costs up a small amount compared to 2024-2025.

Unlike residential consumers, businesses do not benefit from a price cap that protects them from surging energy bills, leaving them vulnerable to market fluctuations.

Business groups have voiced concerns over the lack of government support for rising energy costs, arguing that the issues facing businesses have not received the same level of attention as household expenses. They stress that small businesses play a crucial role in the economy and deserve adequate support in managing their energy costs.

Dr Craig Lowrey, principal consultant, Cornwall Insight:

“Our Business Energy Cost forecast shows businesses are faring no better than households, with bills still substantially above historic averages. While prices may have settled from their peak crisis levels, they are far from being sustainable for the numerous smaller businesses already struggling in this economic climate.

“The only way we are going to deliver sustainable lower energy bills is to deal with the problem at the source – the energy generation. This requires a strong governmental focus on boosting domestic production and reducing our exposure to international disruptions. While this solution is neither quick nor easy, it is essential for achieving long-term stability in energy costs.”