Despite starting a new year with its promise of a vaccine rollout, the UK remained in the grips of the coronavirus pandemic and we entered a third lockdown. The question is, what does the business energy landscape look like now? How has this affected business energy prices? And how can your business plan ahead?
Due to the Pandemic, energy crashed in 2020, but now electricity wholesale prices have doubled, and gas prices are over 141% higher than this time last year.
There are many factors which make up your final energy rates, but what are the main ones pushing prices above and beyond pre-pandemic levels in 2021?
Supply and Demand
Demand dropped in 2020 due to global lockdowns, but production of oil continued at its usual rate, which resulted in high storage levels that were not needed and pushed the price of oil to 18 year lows in March. Historic cuts were then made in April 2020 to keep prices steady. Currently, the market is still subdued by fears the lockdown easing will be delayed. However once the global demand has fully recovered, we expect the market to rise rapidly as supply and demand pressures bite for the first time in 18 months.
Third Party Charges
These are charges out of energy suppliers' control and make up the cost of delivering and maintaining energy networks. Due to the unforeseen demand destruction, some charges have increased to make up for the losses occurred or the extra costs needed to run and maintain the network, eg. increase of costs distributing energy during the day to individuals who have been working from home, rather than to offices which might be closer to the source of generation and cheaper to transport to.
Supplier Costs
Last year there was an increase in the number of unpaid energy bills, which in turn negatively affected suppliers' finances and cash flows. Along with this, the wholesale price of energy has increased, so suppliers have increased their rates for both business and domestic to help ease the pressure and mitigate the risks of forward buying energy for their customers who might not use it if there is another lockdown etc.
What next for your Business energy strategy?
As businesses attempt to navigate the changing landscape around lockdowns and restrictions, it's likely we can expect more surprises like these when it comes to energy use. As a business it's advisable to review your energy strategy now. Shop around for the best gas and electricity tariff for your business. Those businesses that take proactive steps now to implement a robust energy strategy are likely to be better able to adapt to whatever lies ahead.
When does your current energy contract end? Start comparing rates and see if you can switch before prices rise further. Everything from renewable energy - solar, wind, biomass to installing electric vehicle charging can help your business take significant steps towards reducing its carbon footprint and lowering business energy costs. If you need advice on planning, switching and implementing the right strategy for your business, our energy experts at Place Support Partnership can help.
How Can Place Support Partnership help ?
Our team of experienced Place Partners deliver support to help improve towns and cities. Delivering place solutions nationally, we provide direct support to businesses through our business support programmes and strategic support to BIDs, local authorities and membership organisations on a wide range of services. We can work alongside your BID, town or city centre businesses or any cluster of businesses, offering services such as database set up and cleansing, BID feasibility, assistance with BID ballot renewals and mid term reviews, to place savings (reviewing energy costs with your business community and identifying savings ), COVID recovery surveys, member engagement and place campaigns. We see ourselves as an extension of your 'team' - getting in direct touch with your businesses and taking a snapshot of the current sentiment felt in the business community. Our team are experienced Town Centre or Place Managers who understand the challenges and issues faced by businesses.
Place Support Partnership can build a structured support package specifically to help your BID or to reach out to your business community. We are working with several local authorities and BID's utilising the Welcome Back Fund (WBF) and Reopening High Streets Safely Fund (RHSSF) where the procurement of consultants to deliver WBF activity is eligible. The deadline for this funding to be spent is 31st March 2022.
We are working with Haringey Council and in just 8 weeks we've helped businesses in Tottenham make energy savings of £85k!
Contact us today to see how PSP can support your business:
t: 0330 156 289