Today’s business energy support package to help firms through the winter will cost up to £25bn, the consultancy Cornwall Insight estimates.
Robert Buckley, Cornwall’s head of relationship development, explains that the new caps on gas and electricity costs will mean substantial savings for non-domestic users.
“The reduction in energy costs will be substantial. As a proxy and noting the challenge of calculating a homogenous discount across so many contract types, this represents a 45% discount to closing wholesale energy prices as at the end of last week.
The support effectively reverts the market back to where it was price wise in the Spring of 2022.
Buckley adds: “Structuring this as fixed discounts on wholesale energy costs caps the cost of the scheme for government at around £25bn.
“There will also be a strong incentive for businesses to move from out of contract to negotiated contract terms, which acts to maintain the integrity of the market. This will be very important for what emerges after these six months have elapsed.”