It is fair to say that the team at our business energy broker have never faced as challenging market conditions, as those they are currently dealing with. In short, the wholesale gas and electricity markets are at their highest level in well over 10 years and have been for some weeks. This is a stark contrast to where the markets were 12 months ago (when they were perhaps the lowest they had ever seen).
So, what is causing these high prices?:
We are having a relatively mild summer, which is driving unexpected demand for heat.
Typically, 20% of the UK's annual wind power is generated in January. This January, just 4% was generated.
This fall in electricity generation, has forced the UK to turn to gas generated electricity, as have other countries.
This has driven demand, which in turn drives up the price.
In addition, the UK has turned to importing LNG (Liquified Natural Gas) to meet demand, but worldwide freight costs have risen dramatically (almost 4 fold) in the last 6 months... not helped by the Suez Canal incident!
The cost of carbon and oil is also very high at present, which has an impact on prices.
Essentially, everything that could go wrong, has gone wrong and the combination of various factors has driven wholesale energy prices to very high levels.
No one in the industry has a crystal ball that can predict what is going to happen to wholesale prices with any real certainty. Through constant communication with suppliers and news outlets in the industry the feeling at the moment is that the market may not fall for a little while yet. This should not deter you from contacting us as we can help with things such as kVa reviews (agreed capacity (kva) penalty review) and VAT/CCL (Climate Change Levy) checks.
Also for businesses whose current energy contracts are coming to an end, they can help you navigate the maze of suppliers and help secure the best possible deal currently available and help avoid Out of Contract rates.
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