Volatility in the wholesale markets combined with rising non-commodity charges could force energy prices up by 50% by 2020 compared to 2016 prices, according to figures from consultancy firm Inenco.
Customers could face an increase of more than 10% in the total cost of energy this winter compared to 2017-18, fuelled both by wholesale rises and an increase in some indirect charges, such as the Capacity Market levy, the company warned.
Looking to next year, the firm flagged concerns over currency fluctuations caused by the outcome of Brexit negotiations, along with a rise in the Climate Change Levy.
It also highlighted potential changes to the Energy Intensive Industries (EII) exemption threshold, offering relief to more industrial users from the cost of renewable levies, but increasing non-commodity charges for other users.
Over the past six months, prices have spiked at levels not seen for two years, with non-commodity costs rising by 25%.
David Oliver, Senior Energy Consultant at Inenco, said: “This is the tenth successive year of price rises for business energy users and whilst the ‘low hanging fruit’ of energy efficiency may have already been picked, there is still more that organisations can to do reduce costs.
“It has never been more important for businesses to re-assess their energy risk management strategies to consider how to mitigate rising costs, from demand management to building a business case for capex investment in new technology.”
Posted on: 13/11/2018