Rising energy demand tests UK business growth ambitions

• New PwC research shows 89% of UK businesses increased their energy consumption in the past year, 83% anticipate their usage to increase again in 2025
• 92% of businesses expect energy price volatility to increase the price of their products and services over the next two years, up from 81% last year
• 34% state technology (including AI, automation and electrification) is the number one driver of increased energy use
• The proportion of businesses committed to achieving net zero by 2030 has nearly doubled since last year's survey, rising from 28% to 47%
• Businesses rank the high costs of energy demand solutions as the biggest barrier to action

A large study of UK businesses has shown that energy price volatility reduced profits for 89% in the last year, as organisations look to grow and increase their productivity through technology, which includes AI, automation and electrification, driving increased demand for energy availability. 

For a second consecutive year, research was conducted by PwC UK with 750 UK businesses and 50 public sector organisations, examining energy challenges and objectives, progress in energy efficiency, and plans to fund investments in energy.

The technology-driven power surge

Of the 800 organisations surveyed in PwC’s analysis, 89% said their total UK energy consumption grew in the last 12 months, and by more than 10% for a fifth of respondents. Nearly as many businesses expected their energy consumption to increase again in 2025, at 83%. 

A need to balance cost, carbon and energy resilience remained a familiar theme in the research, but this year’s findings showed businesses also faced the added complication of rising energy demand. Pursuing productivity gains and growth through expansion and the necessary adoption of energy-intensive technologies were two factors that look set to add a material increase in energy consumption.

What is driving energy consumption up in 2025? Source: PwC UK Energy Survey 2025

For the year ahead, the adoption of energy-intensive technologies was the main reason for an expected increase in energy demand (selected by 34% of companies), followed by business growth and expansion (33%). With technology the top-ranked driver of energy demand, findings indicate the start of a new phase in the energy transition market, moving from a long-term trend of declining consumption, to increasing consumption, driven by technology, such as AI, automation and electrification.

As a result, costs look set to be passed on, with 92% of businesses expecting energy price volatility to increase the price of their products and services in the next 12 months.

Funding gap emphasises the role for private investment

Businesses ranked high capital costs as the largest barrier to making progress against their energy objectives, with the majority of financial resources being used in the last year to fund energy initiatives coming from existing sources of capital: operating cash flows (59%) and existing credit facilities (50%). There was a similar projection for the year ahead, with businesses selecting operating cash flow (55%) as their most likely source of funding, followed by government support (49%) and existing credit facilities (46%). 

Given the scale of investment required, direct financial support from the Government is unlikely to be available, meaning that there is a funding gap between what is needed to drive energy efficiency, and what is currently being deployed. Businesses acknowledged this, with 69% saying external private investment will be essential or very important to achieving their energy objectives in the next year, yet just 31% or less planned to use it as an actual source of funding.

Future funding for energy initiatives. Source: PwC UK Energy Survey 2025

A predominantly self-reliant approach has seen businesses make the most progress on efficiency measures with low costs and quick returns. Changing to LED lighting (55%), agreeing a renewable energy supply agreement (42%) and on-site solar (40%) were the three most adopted solutions. 

The findings show there has been less progress with solutions that are capital intensive or require deeper organisational change. Just a third of UK businesses said they had fully redesigned their product and service offerings to be less energy-intensive. 32% had fully retrofitted buildings to be more energy efficient, 31% had fully implemented heat pumps or electric vehicles, and just 29% had signed a power purchase agreement (PPA).

Public sector contends with reduced energy expertise and funding constraints

Compared with their private sector peers, public sector respondents were more focused on reducing energy consumption, 36% stating it as their top-ranked objective, (compared with 20% in the private sector). The public sector suffers many of the same barriers holding back progress with businesses, but even more acutely. 36% ranked the high capital cost of solutions among the top two ranked barriers, compared with 32% in the private sector.

It also faces more unique barriers that few businesses do, as 36% placed a lack of energy expertise within their organisation among the top barriers, compared with 19% in the private sector. 38% also cited the lack of solutions with immediate impact, compared to 20% in the private sector..

The proportion of respondents committed to net zero by 2030 nearly doubled from last year’s survey, up from 28% to 47%. Businesses identified cutting carbon emissions as their top energy management objective this year, 26% said it was their number one priority, ahead of cutting unit cost and reducing the volume consumed.

Vicky Parker, Industry Leader for Energy, Utilities and Resources at PwC UK, said:

“The UK is facing the start of a new transition in the energy market, and we are at an inflection point, where tough decisions will need to be made. The adoption of technology combined with the electrification of businesses and the public sector are on course to increase electricity consumption after a long-term trend of decline. The result is that what was once seen as an energy trilemma – managing cost, carbon and security – now has an extra dimension: the need to supply enough stable power to unlock growth and productivity through technology-driven automation. 

“There is a lot at stake for the UK to solve this challenge. We need to view clean power ambitions alongside the global competitiveness of the economy, whilst taking into account affordability and the overall pace of the change that is deliverable.

“Under any scenario, it is critical that the right level of support to make this economically attractive is in place, to ensure that private investment can rapidly support these objectives and work alongside the public sector. The UK’s Clean Power 2030 Action Plan sets the ambition for the UK to be a global net zero leader, but it will need to be balanced against tough economic realities the country faces, including energy security and affordability alongside the levers that will need to be put in place to drive growth.”

Matt Alabaster, Energy, Utilities and Resources Deals Leader at PwC UK, added:

“Private capital is a strategic pool of investment that can move the needle on the UK’s industrial strategy and clean power objectives. However, it has choices about where to deploy. Through our research, investors told us that investing into demand-side energy solutions is currently difficult for a number of reasons. 

“Firstly, UK businesses are currently facing a number of challenges, including increasing costs and slow economic growth. Additionally, the payback period of some energy efficiency investments can be hard to assess without specialist input, and selling complex solutions to large organisations can be a long and highly consultative process. There is also the issue that many businesses are offering point solutions - but few have the scale or coverage to provide a comprehensive or national offer.

“Collectively, these issues are creating a two-fold problem: the supply chain cannot scale without enough demand, and customers want a more comprehensive set of suppliers to give them consistent and repeatable solutions.

“As the UK has demonstrated successfully on the supply side of the energy equation, private capital can invest at scale, but only when the right conditions are in place.

“There is a wall of capital waiting in the wings to engage in this sector, but bringing it on to the main stage will require collaboration across the public and private sectors; the reward would be investment that drives the development of a new ecosystem of suppliers, as well as a more efficient and cleaner economy.”

Methodology

In November 2024, PwC UK surveyed executives involved in energy decision-making at 750 UK businesses and 50 public sector organisations. The survey examined their energy challenges and objectives, their progress in adopting key energy management measures, and how they fund investments in energy. In addition to 750 business executives, the survey included 50 decision makers in the UK public sector for a subset of questions.

Long-term trend of declining power consumption

Total UK electricity consumption has fallen by 22% since 2005 - Digest of UK Energy Statistics (DUKES) 2024, chapter 5.