Business Gas and Electricity Winter Pricing Update

22nd August 2022

Chamber Energy partner Professional Energy Purchasing discuss short-term prices, what’s causing them, and some advice on how to manage them in the winter ahead.

There’s plenty of media attention around the Domestic Price Cap which will see prices potentially double over the next few months. Unfortunately, the story is the same in the commercial market but without the price cap, with unprecedented price rises continuing to have a huge impact across the UK.

Winter prices surge

We’ve been seeing massive swings in prices of 5p/kWh in a day for electricity which translates into thousands of pounds in extra energy costs for some businesses which is a real concern.  

Winter 2022/23 prices have had a huge amount of risk built in because of concerns around the gas supply into Europe and the UK.

These graphs demonstrate electricity and gas commodity prices by month over the next few years compared to the long-term average we have seen between 2012 and 2021 (bottom blue line).

Electricity prices: There’s a clear difference between this winter and subsequent winters which should ease in the future, although still much higher than previous winters.

Gas prices: There’s less of a differential for gas across the next 2 winters and further out prices are again forecast to be lower but well above the historical average.

How does this affect your energy bill?

This table demonstrates the current level of increases on fixed-term energy contracts for the year ahead.

Business Gas & Electricity Prices on 17 August 2022

What is causing the price surge?

Global supply and demand are the root cause of the state of the market:

  • Freeport LNG fire – A fire resulted in a reduction of liquified natural gas (LNG) cargos from the US to the UK and Europe.
  • Nordstream 1 – This is a direct gas pipe from Russia to Germany which is being used as a ‘gas war’ strategy, with supply already cut down to only 20% of capacity leaving Germany woefully exposed and without enough gas reserves for the winter ahead.
  • Gas rationing – Emergency measures have come into place across Europe to reduce gas demand by 15% to help increase gas reserves for the winter.
  • French nuclear – Numerous issues around French nuclear power stations have caused them to be taken offline for safety checks.

 What can you do to support your business?

  • Contingency plan - Areas across Europe are already seeing gas rationing so we would strongly advise that you look at contingency measures in the event of a national energy emergency where there will be a mandate to cut consumption.
  • Home working - Consider getting staff to work from home as you did during lockdown, although you will need to balance that with their ability to afford to heat their homes for work.
  • Energy management investment Our team can help you to find ways of reducing energy waste and implement energy solutions that will make you more self-sufficient and lower future energy costs. You can view some of the testimonials and case studies we’ve completed
  • Savings tips - There are some basic things that can really make a difference. We’ve produced several articles and videos to help big and small businesses find quick ways to cut energy.

https://www.pepgb.com/post/manufacturing-energy-saving-tips

https://www.pepgb.com/post/energy-saving-tips-for-the-office

Member help and support

We work closely with Professional Energy Purchasing to provide members with the best energy options for their business.

Get in touch with the membership team for additional advice and support by calling 0114 201 8888.

 

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