Why an energy-independent strategy is vital for UK manufacturing

IN A report published last year, elevated energy prices were not only seen as the biggest operational obstacle for over a third of manufacturers, but were also identified by the sector’s senior decision makers as the greatest anticipated risk for the year ahead.

Greater control and independence over energy generation and demand is crucial for shaping a more resilient and sustainable future.

A Closer Look at the Energy Price Landscape

Though energy prices have eased slightly from the 2022-2023 peaks, ongoing market pressures and policy changes mean costs remain well above pre-crisis levels.

Independent research from Cornwall Insight also indicates that high costs are here to stay. It has revealed that energy prices for small industrial and manufacturing businesses will rise incrementally – exceeding pre-crisis levels by around £200,000 annually.

And this 57% increase means that, by the April 2026 - March 2027 contract year, these businesses will be paying £232/MWh - which equates to £550,000 annually, based on an average yearly electricity demand of 2.33GWh.

This projected surge will significantly impact the industry, with many businesses already feeling the financial strain.

Weathering the Financial Storm

Alongside energy prices, businesses are also facing more general financial pressure.

This was announced in the Autumn Budget, when measures were introduced, such as increasing employers’ National Insurance contributions by 1.2% to 15% from April 2025.

Therefore, as energy prices and rising business costs continue to challenge the UK industrial sector, manufacturing businesses are looking at ways to streamline their spending.

It’s a strategic balancing act of trying to remain profitable and productive amid elevated expenditure, while still reducing carbon emissions, and without pushing these extra costs onto customers.

That’s why now, ahead of energy contract renewals in April, many manufacturers are starting to rethink their energy strategies, exploring on-site alternatives that help to mitigate price increases and to achieve more stability in an ever-challenging energy landscape.

Harnessing an Energy-Independent Future 

The ongoing volatility of global energy markets, alongside heightened costs and supply chain concerns, make energy independence a strategic necessity for the UK’s manufacturing sector.

As an example, by generating their own solar energy on plant and factories’ empty rooftops, manufacturers can hedge circa 20-25% of their energy needs, alleviating exposure to market fluctuations, reducing their reliance upon the National Grid, and safeguarding operational stability, as a result.

It also doesn’t have to cost the earth. There are options to invest in renewable technologies without upfront capital, so all businesses can access cleaner, greener, cheaper energy.

It also supports long-term sustainability goals and carbon footprint reduction, lowering emissions and fostering a sustainable supply chain.

Ultimately, this shift should be a vital consideration for manufacturers that are looking to future-proof their business, retaining cost control and maintaining competitiveness in a challenging economic climate.

Jamie Shaw is CEO of Shawton Energy

For more information:

shawtonenergy.co.uk

Tel: 01925 794874