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What’s going on in the business energy market right now?

Senior Procurement Analyst at Consultiv Utilities, Bobby Robson, explains why understanding the energy market is critical for any business looking to manage overheads and improve profitability.

My years in the energy sector have taught me one thing above all others: the energy market never stays still. Recent events have shown us all just how volatile and unpredictable energy access and pricing can be for households and businesses alike. But when it comes to making it through tough times unscathed, knowledge is power.

There’s no doubt that the current state of the energy market and wider geopolitical events are creating uncertainty and instability – two things that most businesses prefer to steer clear of whenever possible. However, it’s important not to bury your head in the sand when it comes to energy overheads. Having a firm grip on the market and a strategy in place for negotiating a range of challenges will typically help to minimise risk.

Market Outlook: gas and electricity prices remain high

Following on from the energy chaos of the 21/22 winter season, both gas and electricity markets remain significantly elevated year on year.

For electricity, prices are expected to curve upwards through to Winter 2022, with forwards contracts remaining subject to near-term market developments. And gas prices are expected to follow a similar pattern. Longer dates gas contracts will most likely continue to be impacted by supply issues for some months, resulting in elevated future trading activity and high costs.

Commodities are also becoming more expensive

Businesses rely on commodities like oil, carbon and LNG for manufacture, transport and more. Yet current market outlooks suggest that prices for these essential commodities will continue to rise further over the course of 2022.

LNG prices are likely to remain at significantly elevated levels, exacerbated by Russia’s ongoing invasion into Ukraine. The ongoing dispute surrounding Russian gas payments is likely to accelerate the EU’s efforts to seek out alternatives to Russian gas. This is increasing reliance on LNG exporters for additional supply, resulting in potential shortages and raised prices.

Likewise, oil prices are also expected to remain high. Elevated prices for Brent crude oil are likely to stick around, as a result of the tight global supply. This has again been exacerbated by the increased oil export sanctions placed on Russia, which in turn is fuelling widespread concerns about future Brent crude oil global supply.

However, the outlook for UK ETS carbon prices over the next few weeks remains neutral. Forecasts of increased wind generation will be offset by continued cold temperatures.

Back to basics: best practices for businesses right now

So, with energy prices set to stay high for the foreseeable future, it’s never been more important for businesses to be smart about their energy usage.

An energy audit can show you where your energy budget is going, giving you an insight into where changes could and should be made, while switching your energy supplier allows you to select a contract that is more in line with your needs.

Simple changes like switching off computers and other equipment when they’re not in use, switching to LED lights, keeping radiators and air vents clear, and reducing your water use can all help to cut energy costs. Even simply putting less water in the kettle can make a difference. The Energy Saving Trusts estimates that overfilling kettle costs Brits £68 million every year.

It’s important to remember that you’re not powerless when it comes to managing your energy. Making these small changes and providing training to staff on easy-to-implement efficiency measures can make a big difference over time, and can help your organisation weather short-term volatility.

Conclusion: it’s a tough time for businesses, but don’t fret

With prices staying high – and even rising higher – many businesses are understandably concerned about the future of their energy use. However, this is not a time for panic. The classic British mantra of Keep Calm & Carry On applies here, as the best thing businesses can do is keep a level head, seek out support and guidance where needed, and get familiar with the terms of their own gas and electricity agreements. Remember, when it comes to the energy market, knowledge is power.

The coming week is also set to introduce increased wind outturn, which will act as increased domestic supportive drivers. Now is the time for organisations to consider long term sustainability goals, as seeking out greener energy methods goes hand in hand with cutting your spending over time. In order to take significant steps forward, a smaller carbon footprint is essential.

Not sure you’re getting the most competitive deal on your business energy contracts? Visit www.consultivutilities.com today.

This was posted in Bdaily's Members' News section by Consultiv Utilities .