The Care Home Energy Crisis: Why Costs Are Rising and What Providers Can Do
The UK care home sector faces a significant operational challenge: a persistent energy crisis that is driving up costs and threatening financial stability.
With 24/7 demand for heating, lighting and medical equipment, care homes are high-volume energy users. This makes them particularly vulnerable to market volatility. For providers, rising energy costs directly impact the ability to deliver high-quality care to some of society’s most vulnerable people.
This situation is a major concern for the social care sector. As businesses, care homes are exposed to the full force of rising wholesale energy prices. With some providers reporting heating bills increasing several-fold, the pressure is immense. Many are forced to divert funds from resident wellbeing to simply keep the lights and heating on.
Understanding the causes of these rising costs and identifying practical solutions is crucial for sustainability. This guide breaks down the key challenges, explores the factors driving the care home energy crisis, and outlines what care providers can do to mitigate the impact.
Why are care home energy costs so high?
Care home energy costs are high because the sector has sustained energy demand, limited flexibility around usage, and direct exposure to changes in the commercial energy market. For care providers, the issue is rarely one single cost driver. It’s usually a combination of consumption, contract timing, building efficiency and wider market conditions.
Several factors are adding pressure:
- Market volatility: wholesale gas and electricity prices continue to move in response to global supply, demand and geopolitical events. When markets are unstable, suppliers adjust commercial energy prices. Care providers can then see higher unit rates, standing charges and renewal quotes.
- High operational demand: care homes have high baseline energy use because heating, hot water, catering, laundry, lighting, safety systems and specialist equipment all draw on supply throughout the day. There is often less room to shift or reduce this usage compared with other sectors, as energy decisions must support resident wellbeing, compliance and continuity of care. Even a small increase in the price per kilowatt hour (kWh) can have a significant impact across a full year.
- Older, less efficient buildings: many care homes operate from older buildings that were not designed around modern energy efficiency standards. Poor insulation, ageing boilers, inefficient heating controls and heat loss can all increase gas and electricity consumption. As a result, providers may need more energy to maintain stable indoor temperatures and keep essential services running.
- Exposure to deemed, out of contract or commercial energy rates: care homes are commercial energy users, so they are exposed to changes in the business energy market. Deemed rates are applied when a supplier provides energy without an agreed contract in place, often after a site move or change of ownership. Out-of-contract rates can apply when an existing agreement ends without a new one being secured. Both are usually more expensive than negotiated fixed energy contracts, so they can add avoidable pressure to already stretched budgets.
What practical steps can care providers take?
Market conditions are difficult, but care providers still have options. A structured approach to energy management can help reduce avoidable costs, improve budget control and make future renewals easier to manage.
Review energy use and identify quick wins
Start by looking at where energy is being used across the site. Heating, hot water, lighting, laundry and catering are usually the main areas to review, as small changes in these areas can have a noticeable impact over time.
An energy audit can help identify waste, inefficient equipment and areas where usage is higher than expected. This gives care home owners and managers a clearer basis for making practical changes, rather than relying on estimates.
Operational changes may include reviewing heating controls, checking timer settings, reducing heat loss, replacing inefficient lighting and making sure equipment is switched off when it is not needed. Staff engagement also matters. Clear internal processes can help reduce avoidable energy use without affecting resident comfort or care standards.
Manage your energy contract before renewal
Energy procurement should be reviewed before a contract reaches its end date. Leaving it too late can limit your options and increase the risk of moving onto out-of-contract rates.
We recommend reviewing your business energy contract 6 to 12 months before the end date. This gives you time to compare the market properly, assess fixed-rate options and decide whether your current contract still reflects your care home’s usage.
A fixed-rate energy contract can help with budget certainty by locking in unit rates for an agreed period. This can be useful for care providers managing long-term staffing, occupancy and local authority funding pressures.
Invest in energy efficiency upgrades
Longer-term efficiency improvements can reduce energy consumption and improve cost control. Upfront investment is a factor, but the right upgrades can support lower energy use year after year.
Key areas to consider include:
- LED lighting: replacing older lighting with LED alternatives can reduce electricity use, especially in areas with long operating hours such as corridors, communal spaces, kitchens and staff areas.
- Insulation: improving roof, wall or pipe insulation can reduce heat loss and help maintain stable indoor temperatures more efficiently.
- Heating systems and controls: modern boilers, efficient heating systems and smart controls can make it easier to manage temperatures by area, reduce waste and avoid unnecessary fuel use.
- Laundry and catering equipment: older equipment can use more energy than necessary. Reviewing high-use appliances can help identify where replacement or maintenance may reduce running costs.
- Metering and monitoring: smart meters or sub-metering can give better visibility of how and when energy is being used. This can help identify unusual spikes, inefficient usage patterns or equipment that is using more power than expected.
The best results usually come from combining better procurement with practical efficiency measures. A competitive energy contract helps reduce the price you pay for each unit of energy, while efficiency improvements reduce the number of units your care home needs to use.
How Business Utility Hub Can Help
Managing care home energy bills takes clear information, timely action and a strong understanding of the commercial energy market. At Business Utility Hub, we monitor business gas and electricity prices daily, so we can help you review your current position and identify suitable options before your contract becomes a problem.
We understand the pressures care providers face. Energy costs need to be managed carefully, but any decision must also support resident comfort, continuity of care and long-term budget planning. Our role is to give you clear, honest advice and make the process easier to manage.
We compare contracts from a range of trusted energy suppliers and help you choose an option that fits your site, usage and renewal dates. Once you’ve selected a contract, we handle the switch from start to finish, reducing admin for your team and helping you avoid costly deemed or out-of-contract rates.
With Business Utility Hub, you’ll have a dedicated account manager who understands your care home’s energy needs and keeps track of key dates. There are no hidden fees, and we’ll always be clear about what is happening and why.
To review your care home’s gas and electricity costs, contact our team today for a no-obligation review.
Compare and switch your business energy today
To review your current energy costs, call 0800 781 2700 or email savings@businessutilityhub.co.uk.
Our team can provide a no-obligation review of your electricity and gas contracts.
