The sudden and dramatic increase in energy prices is causing companies to seek ways to bring costs down. In a survey of 846 businesses across 17 different countries, Ayming’s research found that 77% of firms are changing their business to counter energy costs. Over a quarter (26%) of total respondents described those changes as radical.

This has kickstarted a range of transformation and R&D programmes. The most popular tactic is to look for energy efficiency savings, which 44% of businesses are doing. However, people are also turning to more advanced and drastic strategies, such as looking to alternative energy sources, which 33% of businesses are doing, or looking for alternative materials – such as those not derived from fossil fuels – which 30% of businesses are doing.

Similarly, businesses are rethinking supply chains, both in terms of where they source materials, with 30% sourcing materials more locally, and how they transport them, with 30% looking at their logistics.  

Mark Smith, Partner: Innovation Incentives at Ayming UK, says: “The rise in energy costs is so significant that, in a matter of weeks, some businesses have gone from a reliable profit to losing money. You can’t simply wait and hope for costs to go down. Survival often now depends on minimising the damage to the bottom line, which has jolted companies into action. People are now evaluating every possible option and implementing significant changes both to bring their energy consumption down and to minimise their exposure to expensive fossil fuels.”

Njy Rios, Director: Innovation Incentives at Ayming UK, explains the significance: “Companies weren’t previously motivated to change at this scale due to the large upfront costs. Reducing your energy consumption can be really expensive, but the crisis has flipped that on its head. Now, the cost of doing nothing outweighs the cost of investment. In that way, the energy crisis is a natural catalyst for green action and sustainable innovation.”

Considering the vast upfront investments needed and the fact that profits are being squeezed, Governments have a responsibility to support businesses by providing funding. However, when asked if they believe they have sufficient funding, only half of respondents said they were receiving the funding necessary to navigate the crisis.  

Smith says, “Governments must ensure they have a wide range of support mechanisms to stimulate the energy transition, including R&D tax credits, grants, and subsidies. However, in light of the crisis, there’s also an argument to expand funding to any and all projects that reduce a company’s carbon footprint. So not just technical R&D but straightforward re-organising like localising manufacturing. That will provide immediate benefits both to the economy and environment.” 

Further data and insight can be found in the full report: The International Innovation Barometer 2022/23.