Monahans market research: A review of the UK energy sector

At Monahans, our work with businesses of different sizes and across a broad range of industries, relies on an in-depth understanding of the UK business landscape. The wider economic climate and consumer landscape are full of factors that impact the running of UK businesses, and it is our job to help them to navigate these evolving challenges.

To ensure that the guidance and support that we provide to our clients is effectively meeting their unique needs, we are always looking for ways to gauge the sentiment of the market in which we operate. As part of this, we recently commissioned a survey of management teams, senior executives, and business owners at more than 300 micro, small, medium and medium/large-scale enterprises throughout the south-west. The findings help to build a picture of how businesses are faring in terms of financial performance and recruitment, as well as any sector-specific issues they’ve been facing.

Businesses operating in the energy sector are just one of the industries we felt it was important to survey. UK business energy statistics show that the energy market is worth a combined £106 million for gas and electricity, as of 2024. This marks a 72% increase from the 2012 value. The sector also directly or indirectly employs around 743,000 people according to Energy UK – equating to one in 48 jobs in the UK.

Like many UK organisations, the energy sector has faced a variety of challenges over the last 12 months. It has also been going through a period of transition over the past decade, with shifts towards renewable energy sources and an increasing reliance on digital technology. In other words, business owners in the sector are operating in a shifting landscape. We speak with Clare Bowen, Partner, about how the sector is faring and how Monahans has been supporting businesses in 2024.

A market overview
The energy industry is currently undergoing a rapid transformation to meet growing electricity demand, cut carbon emissions and ensure security of supply. But the last few years have been less than straightforward. According to Energy UK, since Autumn 2021 the price of wholesale gas on the international market has been more volatile than ever, driven by the demands of post-pandemic recovery and compounded by the Russian invasion of Ukraine in February 2022. This has particularly impacted businesses whose purchases (such as gas) are subject to global prices.

Our research revealed that over the last 12 months, businesses operating in the energy sector in the south-west saw inflation/rising operational costs (40%) and, ironically, energy prices (40%) as the biggest challenges faced. This was followed by a myriad of others including supply chain issues, digital transformation and unpredictable consumer preferences. Respondents anticipate that these will continue into the next six months, as well as predicting that political events could also have an impact.

Road to recovery
Despite recent turbulence across the energy sector, it is encouraging to see that companies have, in general, experienced a period of growth in the last 12 months. Indeed, companies in the energy sector ranked the market as more buoyant than businesses in any other sector, ranking it 8.2 out of 10 (1 being the lowest and 10 the highest) and above the average of 7.0 out of 10 across all businesses surveyed.

This is also reflected in increases in turnover, with 60% of energy sector businesses, the

highest figure of all the sectors, reporting having a better year than in the previous 12 months. Intriguingly, though, their percentage increase in turnover of 19% is the second lowest of all the sectors, only narrowly beating the tourism sector (18%). Despite the inflationary challenges faced over the last year, only 20% reported a decrease in turnover.

When it comes to recruitment, over a third (40%) of energy businesses were able to increase their headcount in the last year, whilst 20% saw it decrease. Looking ahead, however, it is hoped that further innovation in the sector will drive increases in energy sector employment. Over the coming years, we are expecting to see energy companies continuing to diversify their offerings and non-traditional energy companies enter the energy space. A recent study found that as many as 73,000 new jobs could be created in the UK energy sector by 2030, with a further 50,000 relating to the grid.

Where do we go from here?
The finances behind any size or type of business can be complex, time consuming and stressful, particularly if times are tight or uncertain. At Monahans, our job is to ensure that clients don’t have to lie awake at night worrying. Businesses often cite the emotional reassurance that they receive from knowing that an expert is just at the end of the phone and is working with their best interests in mind, not to mention keeping track of important deadlines so that they don’t have to.

Whilst unpredictability is inevitable, as accountants we work to ensure that businesses and organisations can get out ahead of whatever is coming their way, take command of their finances and, most importantly, enable them to continue to deliver invaluable services to the UK.

If you need support with the running of your business or would like to discuss your specific needs, please contact Clare Bowen, who would be more than happy to discuss your options.

To download the full report, visit the Monahans website: https://www.monahans.co.uk/publications/swresearch-july24

Clare Bowen