September 9, 2022

Transpero

Tiny articles, big solutions.

How small businesses can deal with the energy crisis

small businesses can deal with the energy crisis
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The current energy crisis has led to a significant increase in the wholesale price of electricity and gas. This is a clear indication that the energy market is extremely volatile, especially in times of crisis. It’s now crucial to secure energy independence and manage energy costs.

And, legislation is now coming for businesses and individuals to diverge away from fossil fuels, so companies that act now may future-proof their operations against shocks from energy in the long run. But how is the energy crisis impacting UK businesses? As a result of the energy crisis, businesses are now getting high energy bills. This article discusses how small businesses can deal with the energy crisis.

The energy crisis

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The energy market is highly competitive and each country has its dependencies on electricity and gas based on several factors. There is a retail supply industry that depends on international and national events that cause uncertainties. It’s this uncertainty that leads to volatility in the energy industry.

With the COVID pandemic, there were subsequent lockdowns that decreased overall demand for energy, though commodity base load costs increased. Because of the decisions to lower gas storage, the UK depleted current resources between 2020 and 2021. No wonder, the country has since been struggling to get gas as energy demand rose post lockdown.

Worse still, the Russian invasion of Ukraine increased the energy crisis because distressing global events usually affect stock and energy markets as there is uncertainty. Russia also threatened the world that they would switch off the gas supply, so this is causing even more energy market volatility and higher energy prices. While the UK doesn’t source a lot of Russian oil and gas, the reluctance of the European countries to utilize fossil fuels from Russian means that more countries in Europe are competing for the same sources outside Russia.

The impact of this energy crisis has seen smaller UK energy suppliers closing their businesses. This is because they are not able to have enough credit that can cover the increased wholesale costs. You should note that the cost of maintaining buildings and heating homes has risen, but the impact of the energy crisis may not just be attributed to rising energy bills. Operational uncertainty and financial strain are increasing for heavy industries, such as agriculture and factories.

Overheads are also higher than before, and those that are in industrial and energy-intensive companies are experiencing high operational challenges and they cannot price effectively. It’s hard to determine the cost of a product when the cost to produce that product increases dramatically. Remember that increases in the cost of production tend to squeeze profit margins and impact the bottom line.

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Unfortunately, energy-intensive buildings that have high service charges may no longer be attractive and will get harder to get. For building owners and tenants, and asset managers, current issues are bigger. An inefficient building is now an expensive building, and there are energy buildings to consider. While corporate tenants strive to lower their overhead expenses, energy-intensive buildings that have high service charges can be unattractive. Lease agreements may be at risk because many business owners can fail to renew them. And, without rent coming in, profits will decrease.

Actions businesses need to consider

Improving the energy performance of the operations and buildings should now be crucial. Keep in mind that the energy market is volatile, and while energy prices may fall, future events as well as impacts of climate change can cause energy prices to rise again.

The quickest intervention is building optimization, so businesses need to consider it so that they can reduce the effects of future energy shocks. You also need to have a good insight into energy hotspots and asset-level intervention across your portfolio to strategically inform your disposal and avoid energy costs while saving carbon by making necessary and immediate operational changes.

Just like at home, there are a couple of things at your business premises that don’t require to be left on. Most devices use energy, and it can be hard to be aware of it. For example, you can decide to switch off your computers instead of being left in sleep mode. Besides, you can also switch off electric equipment and tools at the source, which also assists to make the premises safer. But some devices also have to be left on, especially at some business premises, such as fast food franchises. Freezers and fridges are some examples of these devices, but for the most part, you can turn off everything that is not needed so that you can save on your energy bills.

Once the world started switching to reduced energy use and cleaner homes, the first thing to be addressed was lighting. LED lights tend to be cheaper and utilize at least 90 percent less electricity than a standard bulb. You can also save cash by installing lighting solutions like timers and motion sensors. For example, employees working in customer restrooms are not always busy, so it’s a waste of money and energy to leave the lights on. Aside from this, smart lights usually come with an app that allows you to turn them on and off remotely.

Renewable energy is a great option when it comes to energy consumption. Wind, geo, solar, and hydro solutions offer green, clean, and unlimited electricity production. The good thing is that improvements have reduced the cost of these technologies. Also, clean energy suppliers can usually cost less than fossil fuels, and you can lower your carbon footprint. 

Your business premises also don’t need a regular air or temperature control unless you store valuable artwork or wine. Hence, you can decide to switch off your HVAC system or lower your thermostat once your customers and employees are not there. In this way, you can save a lot of money on energy bills. For example, you can switch off your air conditioning when you are not working so that you can save on your electricity bills. You should also note that most modern HVAC systems tend to have timers, so they can turn on before your members of staff come back to work in the morning.