The rising costs of energy prices have hit businesses hard over the past year. Spare funds within a business will likely be put aside to tackle further rises in energy bills. It may seem that the prospect of growing your business and acquiring more market share is dwindling but there is good news on the horizon. The Energy Bills Relief Scheme ends on 31st March. Now might be the perfect time for you to investigate ways business finance can enhance your business growth.
Quick ways to help tackle the rising cost of energy
There is no quick fix to cutting energy costs. However, there are a few ways you can tackle your rising energy costs from the word go and adopt energy-saving practices.
- Switch off equipment that isn’t in use and ensure employees have training on how to safely switch off equipment.
- Upgrade out-of-date and energy-draining equipment; newer models tend to use less energy. (Asset finance could be a great solution to help spread the cost of acquiring new equipment.)
- Upgrade to LED bulbs with occupancy and daylight sensors. Smart lighting is up to 80% more energy efficient.
- Consider insulating your building to help keep it warmer in the winter
- Upgrade air conditioners as newer models are often less energy-intensive
- Consider zoning parts of your building by avoiding heating areas that are not in use
- Ensure that thermostat installation is away from windows and radiators
What is the Energy Bills Relief Scheme?
The Energy Bills Relief Scheme aims to help non-domestic customers tackle the rising costs to their business gas and electricity. The government provides a discount on wholesale energy prices of up to £211 per megawatt-hour (MWh) for electricity and for gas up to £75 per MWh. These discounts have been applied directly to business bills since 1st October 2022 and will end on March 31st, 2023.
After the end of March 2023, the scheme is set to change to the Energy Bills Discount Scheme. This new scheme will see a reduction in support for businesses, but gas bills are set to be discounted by up to £6.97 per megawatt-hour (MWh) and £19.61 per MWh for electricity. UK businesses that have a large number of energy-intensive practices will expect to get more support. This new scheme will run from 1st April 2023 up until 31st March 2024.
How can it help me in my business?
This government scheme proves extremely helpful to small and medium-sized businesses in the current economic climate as it gives a modicum of relief to the surging energy bills. It also allows some space to re-evaluate where costs can be cut and investments opportunities in order to further save and grow.
Businesses do not need to apply for their discount. Energy suppliers will do the work of applying the reduction to the bills of eligible, non-domestic customers. The government will then compensate the suppliers for the reduction.
Who is eligible for the scheme?
Just like the Energy Bill Relief Scheme, the Energy Bill Discount Scheme is available to non-domestic energy customers. This includes businesses, voluntary sector organisations, and public sector organisations.
Fixed Price Contracts
Customers on existing, fixed-price contracts will still be eligible as long as the contract was agreed on or after 1st December 2021 and the wholesale element of the price you’re paying is above the Government Supported Price.
Default, Deemed, or Variable Tariffs
Customers on default, deemed, or variable tariffs will receive a per-unit discount on energy costs. This will be up to a maximum of the difference between the Government Supported Price and the average expected wholesale price over the period of the scheme. The maximum discount amount is likely to be around £345 per MWh for electricity and £91 MWh for gas.
Flexible Purchase Contracts
Some of the largest energy-using businesses are on a flexible purchase contract. In this instance, the level of discount is calculated by the specifics of the company’s contract and subject to the maximum discount.
How speaking with business finance brokers can help
As business finance brokers, we believe that with the right business finance and support, your business can grow without limits. Looking to improve your cash flow and cut the cost of your energy bills this year? We’re on hand to provide helpful and professional business finance advice.
Asset Finance may be the way to go for your business in acquiring the equipment you need to make a difference in your energy bills. By taking away the upfront cost of acquiring newer, greener assets, Asset Finance can help you retain your cash and pay for the assets over time in small, affordable payments.
We currently have over 100 asset finance providers on our panel whom all specialise in certain industries or asset types. These funders provide specific facilities that do not affect your bank borrowings.
If you’re considering asset finance for your business, get in touch today to see how PMD can help. We can provide all the advice and guidance you need, as well as ensure a streamlined, stress-free process. You can contact us on 0161 633 2548 or send an email to salesadmin@pmdbusinessfinance.co.uk.
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