Energy Minister Martin McCluskey has told a Labour Party Conference fringe that the shift to clean power is as important for small businesses as it is for households, as E.ON warned that business bills can stay high even when wholesale prices fall.
Speaking at the SME4Labour and E.ON Business Energy Breakfast in Liverpool, McCluskey, Minister for Local Energy and Jobs, said the government’s 2030 clean power goal was about security as much as cost.
“Ultimately, this is about giving us control over the source of energy and price, and that’s as important for SMEs as it is for households,” he said, of the clean energy transition.
McCluskey said Britain remained uniquely exposed to volatile fossil fuel markets, with gas still making up the largest part of most bills. Each new solar panel and turbine, he argued, meant gas set the price less often.
Why bills stay high
Anthony Ainsworth, Chief Operating Officer for Industrial & Commercial at E.ON UK, told the room that business energy costs come down to three things: the cost of the energy itself, network costs, and policy costs. Wholesale prices could fall sharply, he said, and bills could still rise if network and policy costs keep climbing.
Ainsworth said any serious effort to bring costs down had to look at all three. He suggested spreading the cost of the transition over a much longer period, and moving some policy costs off electricity bills. Businesses backed decarbonisation, he said, but “not at any cost”.
Support for small firms
McCluskey said help for small businesses already exists but is under-used. Heat pumps are available to small firms through the boiler upgrade scheme, he said, and too few apply.
He also said he had championed a “high street test” for energy support when he held the energy consumers brief. He said a gap remains between the large industrial schemes and household support, with businesses like hairdressers and gift shops using about as much energy as a home. Decisions on future support, he added, would come in the Budget.
Questions from the floor
Audience questions covered several areas:
Tenants and solar. One small business asked how renters can install solar when landlords pass on energy costs. McCluskey pointed to minimum energy efficiency standards for commercial buildings, which he described as a mix of “carrot and stick”.
Wholesale prices. A questioner from a trade-exposed manufacturing sector said their industry still pays significantly more for wholesale power than competitors in France and Germany. McCluskey said the gap reflects decades of underinvestment, and pointed to France’s continued nuclear build-out. He said Britain “built and stopped, and now we’ve restarted”.
British content. Asked why so little steel in UK wind turbines is British, McCluskey said government should look more closely at local content rules.
Regulation. A manufacturing trade body asked about Ofgem’s role in network investment. McCluskey said the Ofgem review would give the regulator a more strategic focus and give government more ability to steer it.
McCluskey said he wanted the challenge from the room, and that the transition would only work with pressure from businesses.
