6th March 2026
Small businesses across the UK have been struggling with rising energy costs, but the pressures are especially acute in Caithness and the wider Far North.
The combination of a colder climate, rural isolation, and a hospitality sector built on small, independent operators means that energy price volatility hits harder here than almost anywhere else.
The challenges facing Caithness businesses mirror national trends, but the local impact is deeper and more immediate.
Why Caithness Feels the Energy Crisis More Sharply
Caithness experiences long, cold winters, so heating is a major operational cost for pubs, cafes, hotels, and B&Bs. These businesses must keep indoor spaces warm and welcoming for much of the year, which makes them more exposed to gas and electricity price spikes. Rural areas also tend to have fewer energy suppliers and higher delivery costs, reducing competition and pushing prices up further.
Seasonality adds another layer of difficulty. Tourism drops sharply in winter—just as heating demand peaks—leaving many businesses with high bills and low income. This mismatch creates cash‑flow stress that urban or southern businesses don't face to the same degree.
Which Businesses Are Most Affected
Hospitality is one of the most energy‑intensive service sectors, and in Caithness it is dominated by small, family‑run enterprises. These firms have limited bargaining power when negotiating energy contracts and often operate on tight margins.
Pubs, cafés, and restaurants face high electricity use from kitchens, refrigeration, and long opening hours. Heating and lighting costs are unavoidable.
Hotels, guesthouses, and B&Bs must heat multiple rooms and provide hot water year‑round. Laundry and cleaning add further energy demand.
Self‑catering units and holiday parks often manage several buildings or cabins, each requiring heating, lighting, and maintenance.
Across Scotland, hospitality businesses report that even those operating at near full capacity are struggling to make a profit because of rising costs.
Highland MSPs have warned that some hospitality businesses in Caithness may be forced to close during winter due to soaring energy bills. Inverness Courier
The Wider UK Context
The pressures in Caithness reflect national patterns. UK data shows that energy‑intensive industries and consumer‑facing sectors have been hit hardest by rising electricity and gas prices.
Scottish business leaders have also told MPs that high energy costs are no longer a temporary shock but a structural pressure shaping the future of SMEs.
This means that even as wholesale prices fluctuate, businesses remain locked into expensive contracts and face ongoing uncertainty.
How Caithness Businesses Are Coping
Local hospitality operators are using a mix of short‑term survival tactics and longer‑term adaptation strategies.
Reducing energy waste through efficiency audits, improved insulation, and better equipment. UKHospitality has secured free government‑funded support to help businesses identify and fix energy inefficiencies.
Adjusting opening hours to reduce heating and staffing costs during quiet periods.
Raising prices where possible, though local demand limits how far this can go.
Exploring microgeneration, such as small‑scale wind, solar, or heat pumps—an approach increasingly encouraged by Scottish business groups.
Delaying investment in upgrades or expansion because energy costs have become a persistent financial burden.
These strategies help, but they don’t fully offset the scale of the challenge.
What This Means for Caithness Going Forward
Energy costs are reshaping the business landscape in the Far North. Hospitality—one of the region’s economic pillars—faces a difficult path unless energy prices stabilise or targeted support returns. Businesses that manage to invest in efficiency or local energy generation may gain resilience, but many will continue to operate on a knife‑edge.
Given the unique climate, geography, and economic structure of Caithness, the region is likely to remain one of the most vulnerable parts of Scotland to ongoing energy price volatility.