Rising energy prices have squeezed profits for nearly 90% of UK businesses over the past year.
With energy consumption climbing, many are struggling to balance costs while staying competitive, says a PwC report.
As firms invest in energy-hungry technologies like AI, automation and electrification, the report which surveyed 750 businesses and 50 public sector organisations, found that 89% saw their energy use rise last year, with one in five reporting an increase of more than 10%.
The trend is set to continue, with 83% expecting demand to grow again in 2025.
Technology is the biggest driver of this surge, as businesses ramp up automation and electrification to boost productivity.
But with wholesale energy markets still volatile, most companies expect rising costs to be passed onto consumers—92% said price fluctuations would increase the cost of their products and services in the next 12 months.
Despite the urgent need to cut costs, high capital expenses remain the biggest obstacle to energy efficiency improvements.
Most firms are relying on operating cash flow (55%), government support (49%) and credit facilities (46%) to fund energy initiatives, but a clear funding gap remains. While 69% acknowledge that external private investment is crucial, only 31% plan to use it.
Businesses are focusing on low-cost, high-return measures like LED lighting (55%) and renewable energy contracts (42%).
However, more ambitious projects such as retrofitting buildings (32%), adopting heat pumps and EVs (31%), and signing long-term power purchase agreements (29%) are progressing much more slowly due to cost constraints.
The public sector is feeling the squeeze even more, with limited expertise and funding making it harder to act. More than a third of public sector organisations identified a lack of in-house energy expertise as a major barrier—almost double the number in the private sector.
With businesses facing increasing energy bills and limited funding, the report says the challenge remains how to manage rising costs without stalling growth.
Many businesses are calling for clearer government incentives and stronger private investment to bridge the gap.
