Energy price freeze: Education industry to see a potential 61% reduction

Schools stand to get a potential bill reduction of up to 61% this month compared to if they had to pay expected wholesale energy prices, according to new analysis following the rollout of the Energy Bill Relief Scheme. 

The energy bills insight, conducted by AI and analytics leader SAS, analysed ONS data from more than 1.6 million business-used buildings to understand how much gas and electricity each sector consumes.  

Following the new scheme, the education industry is currently expected to see an average annual bill per building of £50,750 compared to a forecasted £133,500 if prices had remained at expected winter wholesale costs. 

As businesses anticipate their first bill of the six-month scheme, SAS compared average business energy use and the previously expected wholesale price for winter 2022 with the government’s current non-domestic price cap, to understand how the help will affect different industries. 

The government has stated that wholesale prices could have risen to as much as £600 MWh for electricity and £180 MWh for gas this winter. The new scheme has seen fixed base rate prices of £211 per MWh for electricity and £75 per MWh for gas. 

The research highlighted that businesses that are public-sector focused – healthcare, emergency services and education – will benefit most from the scheme. 

While all industries look set to receive bills that are, on average, more than half of what would otherwise be expected, the retail sector had one of the lowest potential bill reductions, amid calls for support for the high street to help keep product costs down. 

Under the new scheme, emergency services are likely to be spending the most per building on energy – at an average of £90,250. This is perhaps not surprising given a reliable power supply can be key to saving lives for disaster response companies, the police force and the fire & rescue service. 

The industries with the biggest potential reduction in their energy bills: 

Government data reveals that more than half of UK businesses with 10 or more employees have reported rising energy costs as the main reason that they’re considering increasing their prices in October 2022.  

David Ferguson, a risk management specialist at SAS UK & Ireland, said: 

“The energy crisis has dominated the news agenda in recent months, and for good reason as consumers and businesses alike are concerned about how to tackle rising costs. It’s understandable that some businesses were – and potentially still are – worrying, as they could be paying over £100,000 extra a year for energy at a time where budgets are already tight. 

“In a constantly changing environment, applying AI to achieve energy-saving tactics can help businesses to see and deliver cost-saving results quickly. Smart meters, for example, can help businesses and homeowners alike across the UK to better understand their real-time energy consumption, and lead to more accurate billing.   

“Equally energy providers can use these techniques to run multiple what-if scenarios and forecast revenues, given inputs of variability in bad debt, customer attrition, government support and a volatile economic climate. This type of decision support is vital for CFOs and COOs in deciding how to develop and execute on strategies to manage financial and operational components of the business.

“The level of price reductions will vary across businesses, depending on their contract type and their circumstances. Our research highlights just how much businesses could be spending on energy – and the importance of all companies using technology to reduce unnecessary energy consumption where possible.”

For the full research on the energy bills scheme, see here.