Scottish businesses are feeling the financial pressure from escalating energy prices, with the majority expressing support for a shift to zonal pricing, according to new research commissioned by Octopus Energy Group.
The study, conducted by Diffley Partnership and Stratcom UK, reveals that nearly nine out of ten businesses (88%) reported that rising energy costs had impacted their operations, with 62% citing a “significant” effect. This surge in energy prices is affecting key aspects of business, including staffing decisions, investment levels, and customer prices.
The research highlights that there is “overwhelming support” for the introduction of zonal pricing, a system in which energy costs vary depending on the amount of energy produced in a specific region. According to the survey, two-thirds of respondents (64%) are in favor of such a reform, while just over 14% oppose the proposal. The highest levels of support came from the manufacturing and IT sectors.
Greg Jackson, the founder of Octopus Energy Group, explained: “Under our current system, hard-up Scottish households and businesses are exposed to some of the highest energy prices in Europe, while wind farm owners are paid nearly £2bn annually to turn off cheap green energy in Scotland that could be helping out local consumers.”
The report also sheds light on the wider economic impact of rising energy costs. A significant portion of businesses (66%) have said that higher energy prices have influenced their hiring decisions, while 77% have increased their prices for customers. If energy prices were to decrease substantially, many businesses indicated they would respond by increasing staff numbers (64%), investing more in their operations (74%), and reducing customer prices (70%).
In support of the shift to zonal pricing, Octopus Energy Group's report also referenced a previous study by FTI Consulting, which suggested that introducing zonal pricing across the UK could save households and businesses a total of £55 billion on energy bills over the coming decades.
However, not everyone agrees with the proposed system. Last month, industry bodies such as Scottish Renewables cautioned the government against adopting zonal pricing, arguing that it could drive up costs for renewable energy projects and have a negative long-term impact on electricity prices.
The research, which surveyed 234 businesses from various sectors across Scotland, underscores the ongoing challenges businesses face due to the rising cost of energy and the potential benefits of pricing reform.
