It might feel like energy prices are always rising, but they actually fluctuate, which can make the timing of your switch all the more important. Remember – businesses DO NOT NEED to wait until the end of their current contract before arranging a new one; we regularly arrange new contracts for customers up to a year ahead of their existing contract ending. This provides protection for the customer against the market rising in the last few months of their current deal – and means that they can plan their business’ future operating costs with confidence.

Wholesale energy is actually traded on a live market and it is not unheard of for there to be changes of 5% in a 24 hour period, as well as broader trends playing out over several weeks or months. In fact, between March 2023 and March 2024, the wholesale cost of electricity reduced by more than 55%!

There are a number of reasons why prices go up and down on the market:

An increase or a decrease in demand - Energy prices dropped to record lows during the first lockdown of 2020, as business energy demand plummeted. As things returned back to normal and the demand for power increased, the prices went back up. Equally, changes in demand through the wide-scale adoption of efficiency schemes or new developments in a given areas will affect the demands on local and national infrastructure, which ultimately feeds into the price paid by any given business.

Global events - Oil prices are influenced by global events, and it can all come back to supply and demand - if there's conflict, uncertainty, or a natural disaster in a country that produces oil or gas, this will limit production and accessibility, which then pushes up prices. For example, in 2022, the Russian invasion of Ukraine and the political decision from the UK and the European Union to cease imports of Russian gas and oil lead a huge spike in business energy prices in the UK.  

The strength of the pound - As with any commodity, fluctuations in currency value can affect the cost of energy. As the UK imports a lot of its energy (we are a net energy importer), the strength of the pound against the euro and, to an extent, the US dollar, plays a part in costs. If the pound is strong against these currencies, then prices should fall as energy is cheaper. If the pound is weaker, prices are likely to rise.      

The weather - There are a few ways the weather can affect energy prices. A cold snap increases the demand for energy to heat our homes and workplaces and so prices go up. But as we're using more renewable energy sources - a drop in wind means more energy is required from power stations fuelled by nuclear and fossil fuels, often leading to increased prices. Equally, periods of particularly fine weather can lead to an increase in supply from renewable sources and a fall in the overall cost to end users. 

In addition to changes in the energy markets, your business energy costs will also include:

Distribution and transport costs – the National Grid is the system operator for Great Britain’s electricity and gas supplies. It operates the networks that carries energy around the country, managing supply and demand so that users have a safe and reliable supply of energy.

The grid is built around two networks – transmission and distribution. Transmission networks are like energy motorways – transporting it long distances at high voltage or volume to match demand. Then, just like the road system, energy is switched to the distribution network, which takes it on a more local journey, at a lower voltage or volume, into homes and businesses.

Additional taxes and charges - these include green taxes like the Climate Change Levy (CCL) payments and VAT costs which make up other costs you pay for aside from wholesale energy.