The energy industry has dominated the news over recent weeks with prices soaring to record highs, raising concerns that many suppliers will fold.
Ofgem reported that numerous suppliers could struggle to cope with the rise in costs and difficult circumstances, resulting in many exiting the market which would impact thousands of customers. In fact, six domestic energy companies have already closed in September 2021.
Many industries will also be affected by the current situation, with restaurants and supermarkets preparing for a possible food shortage as a result of a severe shortage of C02, impacting the drinks industry and leaving abattoirs unable to euthanise livestock.
Ofgem’s Chief Executive Officer, Jonathan Brearley, said: “We do expect more (suppliers) not to be able to face the circumstances we’re in, but it’s genuinely hard to say more than that, partly because that means predicting what may happen to the gas price.”
Why is the energy market on the rise?
Gas prices were already displaying a bullish trend due to low storage levels, with stocks replenishing at a slower rate than usual ahead of the winter period. This was not helped by a lack of LNG (liquefied natural gas) deliveries into Europe, with shippers instead sending their cargoes to Asia to benefit from competitive pricing.
However, the significant spike we witnessed on 15 September, which continued over the following weeks, was caused by a fire at the IFA1 Interconnector at Sellindge, Kent. The 2GW pipeline links the UK to France and is one of the most important in the country. The fire will leave the UK without at least 1GW of supply until 27 March 2022.
The interconnector was already undergoing planned maintenance, taking 1GW offline which was set to end on 17 September 2021, however, this was pushed back to 25 September 2021.
Meanwhile, the current surplus in supply on the Continent may result in falling European prices.
What options do I have?
Unfortunately, it is likely that everyone will feel the effects of the current situation, with many facing an energy crisis over the next six months. This is why, now more than ever, businesses are urged to seek expert advice on their energy contracts to prevent unmanageable costs.
Energy consultancies can advise on different products available and look at different terms, providing a clear evaluation of available options and costs.
A flexible energy purchasing model is one way to mitigate the impact as it enables businesses to take advantage of any drops in the market, instead of accepting current wholesale market prices.
Buying Groups also offer an effective way of reducing energy costs. Businesses that combine their purchasing power with others in this way usually achieve lower prices, because suppliers are competing for the overall business of the group’s collective energy consumption.
It is strongly recommended to avoid falling into out-of-contract rates, even though it is tempting to postpone signing a contract in the current climate.
Avoid rogue brokers
In this competitive market not all energy consultants work in the same way or offer the same services. Be wary of any company which guarantees to know what the market is going to do or always reduce your energy prices, as continuous fluctuations in the wholesale energy market make this claim impossible. An energy consultant can only help your organisation secure the best available rates from the same market that everyone has access to. In addition, energy consultants can provide value-added services that save you time and hassle in what is otherwise a highly complex industry.
Please remember that there is genuinely no magic wand and what you are buying is the experience and expertise of the organisation who should be a credible partner to help you achieve your short, medium, and long-term goals. Read more here.
Reduce energy consumption
It may seem obvious but the only way to save money on your energy is to use less… After all, the cheapest kWh is the one you don’t use.
Zenergi can assist your business with energy audits and surveys to help identify energy saving opportunities which can result in significant financial savings. These opportunities can range from simple’ quick wins’, to long term investments which can improve sustainability and protect your organisation for decades to come.
Get in touch
If you would like to get in touch with one of our energy consultants to discuss sustainability and compliance options for your business then you can call us on 023 8028 6300. Alternatively, you can fill out our call back form and we will get in touch as soon as possible.