Energy costs are still rising: what businesses need to do now
Energy costs have been rising since the start of this year, and many organisations are experiencing renewed pressure on energy bills. This is driven by ongoing market volatility, structural changes in supply, and increasing demand across electrified systems.
In this context, businesses must ask themselves how well prepared they are to respond.
Why are energy costs increasing?
While prices vary by region and sector, the underlying drivers are consistent:
- continued geopolitical and supply uncertainty;
- growing demand linked to electrification and digital infrastructure;
- exposure to peak pricing and network constraints; and
- increasing complexity in energy markets.
These factors mean that energy costs are likely to remain volatile rather than predictable.
Energy costs are no longer something businesses can passively absorb. They need to be actively managed.
What do businesses risk by doing nothing?
For organisations without a clear energy strategy, rising costs typically translate into:
- increasing operational expenditure;
- reduced margin control;
- limited ability to respond to price changes; and
- missed opportunities to improve efficiency.
In many cases, the biggest issue isn’t the price of energy but how that energy is being used.
Most businesses have more control over their energy costs than they realise. They just don’t have the visibility.
What should businesses be focusing on?
In this environment, the most effective response is not a single action, but a more structured approach to energy management.
From our work across a wide range of sectors, we recommend three priorities:
1. Improve visibility of energy use
Understanding how energy is being consumed is the foundation for any cost reduction strategy. This means moving beyond high-level billing data to:
- site-level and asset-level insight;
- time-of-use patterns; and
- identification of waste and inefficiencies.
Without this visibility, opportunities to reduce cost are difficult to identify, let alone take advantage of.
2. Address inefficiencies and quick wins
Once visibility improves, you can quickly uncover areas where energy is being used unnecessarily. Typical examples include:
- equipment running outside operating hours;
- inefficient heating, cooling, or lighting settings; and
- poorly performing assets.
These issues are often straightforward to fix and can deliver immediate cost savings.
The fastest way to reduce energy costs is usually to reduce wasted energy. Low-cost operational improvements are often the highest-impact starting point.
For example, we helped a luxury retailer identify efficiency opportunities and build a net zero strategy. This delivered immediate cost savings and streamlined longer-term planning.
3. Align procurement with real usage
Procurement remains important but on its own, it’s rarely enough. The greatest value comes from aligning purchasing decisions with actual consumption patterns, including:
- when energy is used;
- how demand fluctuates; and
- exposure to peak pricing.
This ensures businesses are not only buying energy competitively, but also using it in intelligent ways.
Moving from reactive to strategic
Historically, many organisations have taken a reactive approach: reviewing contracts periodically, responding to price changes and/or treating energy as a fixed overhead. However, this is becoming increasingly risky. Now, businesses are shifting towards a more strategic model that combines:
- data-driven insight;
- continuous optimisation; and
- integration with wider operational and financial strategy.
The link to decarbonisation
One of the most important shifts is how closely energy cost management now links to decarbonisation. In practice:
- reducing energy use lowers both costs and emissions;
- improving efficiency delivers immediate financial returns; and
- transitioning energy sources can reduce long-term exposure to volatility.
The actions that improve energy efficiency are often the same ones that reduce carbon emissions. A good starting place is cost reduction, as this can then be used as a foundation for broader decarbonisation.
Building a stronger business case
In more complex environments, energy strategy is increasingly tied to investment decisions.
For example, we provided a global private equity firm with climate due diligence and costed decarbonisation analysis as part of an acquisition process. This enabled:
- clear visibility of energy cost exposure;
- identification of efficiency opportunities; and
- a costed roadmap aligned with value creation.
What good looks like
Organisations that are successfully managing rising energy costs tend to:
- treat energy as a controllable cost, not a fixed one;
- invest in visibility and data;
- prioritise efficiency and optimisation; and
- align energy strategy with wider business objectives.
This approach not only reduces current spend, but builds resilience against future volatility.
Equip yourself - read the report
For many businesses, the challenge is not identifying opportunities, it’s turning them into a clear, investable plan.
Our report - Is the business case for climate action broken? - explores how organisations are approaching this and where they are seeing measurable financial returns alongside emissions reductions.
The takeaway
Clearly, energy costs will continue to fluctuate. What will differentiate organisations is how they respond.
Those that take a more active, structured approach to energy management will not only reduce costs but create a stronger foundation for long-term performance.
Experts on the topic
Q: How can businesses reduce energy costs quickly?
A: By optimising contracts, reducing waste, and managing peak demand, businesses can cut energy costs within 90 days.
Q: How much can energy management save?
A: Most organisations can reduce energy spend by 10–15% through improved visibility and optimisation.