Scottish businesses are feeling the squeeze from rising energy costs, with nearly nine in ten (88%) saying it has impacted them – and 62% reporting a significant impact.

New research conducted by Diffley Partnership and Stratcom UK commissioned by Octopus Energy reveals the stark reality for businesses across Scotland.

Higher energy prices are affecting jobs, investment and customer prices, with two thirds (66%) of businesses saying it has influenced hiring decisions and more than three quarters (77%) saying it has contributed to price hikes for customers.

While pessimistic about the current situation, businesses are positive regarding the way forward.

The research shows overwhelming support for a shift to zonal pricing – a system where energy costs reflect the amount of energy produced in a region.

Two thirds (64%) support energy pricing reform over just 14% opposition. The highest levels of support came from manufacturing and IT sectors, which could stand to benefit the most from zonal pricing.

With masses of wind farms in Scotland, such a move would give Scottish businesses and households some of the lowest prices in Europe.

If energy prices were to drop significantly, businesses report they would increase staffing levels (64%), invest more in their business (74%) and even bring benefits outside of industry by lowering prices for customers (70%).

This research comes off the back of a landmark report by FTI Consulting commissioned by Octopus Energy, which found that introducing zonal pricing across the UK could save households and businesses £55 billion on energy bills over the coming decades.

Greg Jackson, Founder of Octopus Energy Group, said: “Under our current system hard-up Scottish households and businesses are exposed to some of the highest energy prices in Europe, while wind farm owners are paid nearly £2 billion annually to turn off cheap green energy in Scotland that could be helping out local consumers."

“This research shows the status quo is indefensible given its impact on jobs and investment. It’s hurting households and businesses and has got to change if we want to grow."

“Under zonal pricing, the whole country would save £55bn on bills, prices in Scotland would be amongst the cheapest in Europe and Scottish businesses would thrive.”

"A Scottish business owner who responded to the survey said “[high energy prices] have affected pay increases and the number of new positions we hire.”

Another added: "Scottish businesses must benefit directly from renewable energy generated onshore and offshore in Scotland."

As the UK looks for ways to tackle high energy costs, Scottish businesses are making it clear: a fairer, greener system that rewards renewables could be the key.