Technology adoption driving up business energy costs, study finds

Energy price volatility has squeezed profits for 89% of UK businesses over the past year, as rising energy consumption—up at 89% of firms—fuels concerns about further increases in 2025. A survey of 750 businesses and 50 public sector organisations links the surge to technology adoption, with 34% citing AI, automation, and electrification as key factors.

The study by PwC UK also found that 92% of businesses expect energy price volatility to increase the cost of their products and services over the next two years, up from 81% last year. Business expansion and growth were also key contributors to rising energy demand, with 33% of respondents identifying them as major factors.

Despite the increasing energy consumption, more companies are committing to net zero targets. The proportion of businesses aiming to reach net zero by 2030 has nearly doubled from 28% last year to 47% in the latest survey. However, high capital costs remain the biggest barrier to implementing energy demand solutions, with many companies relying on internal funding sources such as operating cash flows (59%) and credit facilities (50%).

Private investment is seen as a potential solution, yet only 31% of businesses plan to use it as a funding source. Meanwhile, 69% acknowledge its importance in achieving energy efficiency goals. Cost-effective measures such as switching to LED lighting (55%), securing renewable energy supply agreements (42%), and installing on-site solar panels (40%) were the most widely adopted strategies.

The public sector faces additional challenges, with 36% of organisations ranking high capital costs as a key barrier, compared to 32% in the private sector. A lack of energy expertise was also cited as a significant issue, affecting 36% of public sector bodies, compared to 19% in private businesses.

PwC UK’s Industry Leader for Energy, Utilities and Resources, Vicky Parker, said the findings point to a shift in the UK energy market, with businesses increasingly dependent on stable power supplies to sustain growth and technological advancements. She emphasised the need for a balance between clean energy ambitions and economic competitiveness.

The survey, conducted in November 2024, reflects the ongoing challenges businesses and public sector organisations face in managing energy costs while striving for sustainability.