Over late 2022 and early 2023, the situation was dire for hundreds of manufacturing businesses. According to Make UK, the sector’s most important trade body, six in 10 businesses were facing possible closure. Soaring energy costs were mostly to blame.
This is unsurprising when looking back at the historical figures. Both wholesale
electricity and gas costs reached levels not seen this century, and these peaks were sustained for several months.
Whilst costs have fallen considerably in the years since, they still remain at
an elevated level when compared to the averages taken across the previous decade.
Why is energy an industrial problem for UK manufacturing?
The trouble is, the full impact of these spikes is yet to be fully realised and, without interventions, businesses could find themselves exposed to further instability.
As energy market analyst Cornwall Insight points out, volatility in the wholesale energy market is likely to last until at least 2030 unless significant changes are made to long-term energy strategies.
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