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The challenging energy market: Advice and support available for your organisation
You will have seen news coverage about the energy crisis.
Planet First Energy specialists have compiled a useful guide to help your business navigate the challenging energy market.
Reasons for energy price rises
This surge in prices has been driven by many different factors.
Firstly, lifting of Covid 19 restrictions has led to countries beginning to return to a more “normal” usage pattern.
This increase in demand has resulted in record low gas storage levels.
Last year, the UK experienced a particularly cold winter, resulting in storage levels being depleted.
Cooler temperatures in Asia also led to higher competition for LNG (Liquefied Natural Gas). LNG cargoes usually help support UK storage supply.
European gas storage has not yet been replenished. The storage level for Europe is just 76%. There is hope on the horizon.
Nord Stream 2, a new gas pipeline running from Russia to Germany has finally reached completion. Commissioning of the pipeline is currently underway. Once complete, the pipeline will have a capacity of 55 billion cubic meters of gas per year.
Russia is now meeting contracted commitments (via Gazprom) to deliver gas to Europe, but are refusing to supply extra gas, preferring to focus on their domestic demand.
In addition to gas supply concerns, there are also issues with electricity supply, following a recent fire at the electricity interconnector with France, and lower than expected generation from renewables.
This has led to the UK generating more power from gas-fired power stations, and because gas prices are high, the cost of electricity is driven up.
The future of energy prices
At this moment, we can’t be certain if energy prices could rise further, or if renewed confidence in supply will allow prices to return to more familiar levels.
We are seeing energy suppliers closing, as they are having to purchase energy at significantly higher prices than can be passed to residential customers, due to the price cap.
We expect to see more suppliers fail if wholesale prices aren’t reduced.
If your supplier does cease trading, there is no risk to supply, as OFGEM will appoint a new supplier.
For businesses, there is no price cap, so suppliers can pass on the full increase in wholesale energy prices.
Suppliers are making very high contract offers.
We are also seeing suppliers not pricing at all, or withdrawing prices very quickly, due to market volatility.
Any questions? Request a complimentary call with our business energy specialists.
How to reduce the impact of rising energy prices on your business
Your options will depend on when your current supply contract ends and your individual circumstances.
However, our business energy specialists have compiled recommendations, to help your businesses navigate the energy crisis.
• Ensure you are providing meter reads so you are only billed for actual consumption
• If you are struggling to pay invoices it’s vital you communicate with your supplier, at the earliest opportunity, as they may offer payment options
• Develop an energy reduction strategy
• Explore options for self-generating energy< Back to all news