Higher energy bills are leading businesses to invest in energy efficiency measures, new government-commissioned research reveals.
Three-quarters of businesses said they have taken steps to limit their energy use in the last year, in response to rising prices. Of those around two in five (43%) had invested in energy-efficient technology.
Of businesses that had invested, LED lighting was the most popular energy efficiency technology update, with a fifth (19%) of respondents saying they’d used these to limit their electricity use in the last 12 months.
This was followed by other lighting changes (14%), and 11% also mentioned updating to motion sensor lights.
One in 10 cited installing solar panels (11%) but only 5% invested in more insulation.
The most common actions businesses have taken to reduce energy consumption include limiting the use of appliances (79%), followed by turning down the heating (77%) or increasing the monitoring of their energy usage (70%).
However, of those who have limited their use of gas or electricity, just 13% encouraged more home working as a response.
The survey was conducted by IFF Research on behalf of Ofgem and the Department for Energy Security and Net Zero (DESNZ).
The findings informed business protections announced yesterday (7 December), which include clamping down on hidden broker fees and extending the remit of the Energy Ombudsman to small businesses.
Under the new rules, suppliers will have to provide a clear breakdown of third-party broker fees to business customers.
Responding to Ofgem’s new proposals to provide greater protection for businesses, Tina McKenzie, policy chair at the Federation of Small Businesses, said: “It shows the energy regulator has listened to our calls to take action against poor customer services and narrow the treatment gap between small businesses and domestic customers.
“We’ve been repeatedly calling for greater access to the Energy Ombudsman, which currently only applies to microbusinesses (with 10 employees or under). The Department for Energy Security and Net Zero is right to adopt our proposal to extend access for firms with fewer than 50 employees.
“Many of our members rely on energy brokers to secure the best deals though the costs of these services are often hidden in their supply contracts. Requiring energy companies to show the two costs separately will give a better understanding to small businesses of what they are paying for and help build confidence in the Third-Party Intermediaries industry.”
The research report also shows businesses generally thought there was sufficient choice of energy suppliers in the market but disagreed that there was sufficient choice of tariff.
The FSB has long called for energy tariffs to be made more competitive for non-domestic customers.
Last week, it set out its winter asks for government which included the freezing of standing charges and more flexibility to cancel a contract through access to a 14-day cooling off period.
FSB national chair Martin McTague said: “While the fall in October’s energy price cap contributed to the slowdown in inflation, it’s important to point out that business tariffs are not protected by the cap, and many small firms are still living with higher utility bills, putting them under continuing stress.
“Giving microbusinesses the flexibility to cancel a contract through a 14-day cooling off period would deter pressurised sales tactics and help avoid some of the difficulties we saw last year when small firms found themselves trapped on high fixed tariffs.
“Freezing standing charges is another way to help cut energy bills. This is a fee small firms have to pay regardless of their energy usage and has been used by energy suppliers as a back-door way to inflate prices. We therefore welcome Ofgem’s consultation on potentially changing the standing charges system.
“Where relevant, we continue to call on energy suppliers to adopt our Ofgem-backed proposal and allow small firms which are still trapped in fixed contracts signed during last year’s market peak to extend their terms but at a lower and blended rate – between their original fixed rate and the lower wholesale energy prices we saw today.
“Small businesses are looking at Ofgem for a vital protection this winter. We look forward to continuing engaging the regulator on this further.”