Ruari Cairns, Director of Risk Management and European Operations at Open Energy Market, explores the current energy landscape in the UK, government support and its limitations, the importance of seizing control and the intersection of savings and sustainability.
The intersection of climate crisis and rising energy costs
In today’s world, where the pressures of a burgeoning climate crisis meet the harsh reality of rising energy costs, businesses find themselves at a pivotal crossroads. Recent actions by Ofgem, such as the reduction of the energy price cap for consumers, have provided a glimmer of hope for households grappling with ever-increasing bills. However, the same reprieve does not extend to businesses, as government support for them remains static – anchored only by the Energy Bill Discount Scheme (EBDS) introduced at the start of the year – and timelines to achieve key green pledges have been dragged out. This contrast underscores the critical need for businesses to take their sustainability and energy procurement strategies into their own hands.
The current energy landscape
In the ever-evolving energy landscape, the recent surge in oil prices has sent shockwaves through global markets. Oil prices are hurtling toward the century mark, with forecasts of reaching US$100 per barrel in 2023, marking a significant milestone for the year. This upward trajectory, nearly 30% since June, has been attributed to a combination of factors, including production cuts by Russia and Saudi Arabia and surging demand from China.
As the world’s energy dynamics continue to shift, businesses are confronted with the urgency of proactively managing their energy procurement strategies in an environment marked by heightened price volatility.
Government support and its limitations
The EBDS has been a help to businesses – but the government has shown a lack of agility in adapting to the dynamic energy market. As it gradually scales back its support – EBDS ends in March 2024 – businesses must actively seek alternative solutions to their energy woes. Fundamentally, the situation requires a change in mindset – from one of reliance on external assistance to one that prioritises active management of energy procurement strategies.
Seizing control: the imperative for businesses
In short, a forward-thinking approach to energy sourcing and pricing involves businesses evaluating their energy mix, exploring innovative technologies and adopting sustainable practices. This is the way to mitigate the impact of energy costs – all while aligning operations with sustainability objectives.
Good energy procurement is an opportunity – not a burden. By investing in the right strategies and technologies, businesses can reduce costs and enhance sustainability – a duality that serves as a linchpin for long-term success, both from an economic and environmental standpoint.
The intersection of savings and sustainability
Let’s explore this in more detail. The pursuit of greener and cheaper energy sources is not a zero-sum game. The reality is that renewable energy solutions, energy efficiency enhancements and demand-side management practices, for example, are both cost-saving measures and crucial contributors to a more sustainable future.
Plus, in a world where customers, investors and stakeholders increasingly demand businesses to take an assertive stance on environmental responsibility, integrating sustainability into energy procurement strategies can bolster a company’s reputation and market position.
The holistic approach to energy procurement
Effective energy procurement strategies encompass a holistic approach that extends beyond simply selecting the lowest-cost energy source. Instead, businesses should consider various factors, such as the reliability of energy supply, the environmental impact of their choices and the potential for future cost volatility.
This requires a nuanced understanding of the energy market, which can be facilitated through data-driven analytics and expert guidance from the likes of True, powered by Open Energy Market.
Calling upon energy procurement specialists and real-time data modelling on energy consumption ensures that businesses can remain flexible and adaptable in their approach to energy sourcing. The energy landscape is in a state of constant flux, with regulatory changes, technological advancements and market dynamics continually reshaping the terrain. Staying ahead of the curve demands benefitting from the expertise of specialists with a willingness to innovate and embrace new opportunities for negotiating competitively priced energy contracts – such as Power Purchase Agreements (PPAs) and decentralised energy solutions – in a way that best suits the specific needs and energy usage patterns of each business.
Case study
Trelleborg Group is a global leader in the engineering and production of polymers. Polymers are long chains of molecules that serve as building blocks in rubber and plastics, and they are necessary for creating sealing used across the aerospace, oil & gas and hydropower industries.
As an international organisation, Trelleborg is committed to reducing its energy consumption and carbon emissions and, within the UK, the company has recently completed a major sustainability transformation.
• Energy consumption decreased by 28%
• One hundred percent transition to renewable energy across 19 UK sites
• Solar, EV Infrastructure and True platform fully implemented
The True platform helped the team to understand where the largest areas of consumption were concentrated and where energy could be saved, resulting in a 28% reduction in usage.
Working with the True team, Trelleborg was provided with clear and concise information relating, not only to its own energy consumption, but also the fluctuations impacting the price of energy within the UK market.
This ensured that forecasting on energy costs could be accurately planned and mitigated for, if increases were expected.
Colin Farrell, Global Sourcing Specialist, Trelleborg Group, said: “For me, the benefit of True is the team has instilled confidence in a market that has been lacking in transparency – I believe that the type of business that we are in, we need to look at long-term, and for me, True, powered by Open Energy Market is a long-term business partner, rather than a two, three or a four-year proposition.”
The road to long-term success
In a world where the climate crisis intersects with a volatile energy landscape, businesses face a pivotal moment. Government support, while valuable, is not a long-term solution, placing the responsibility squarely on businesses to take the lead in managing their energy mix.
The good news is that energy procurement, when approached effectively, can reduce costs while championing eco-responsibility. And in the modern business world, a convergence of economic prosperity and environmental stewardship is the key to enduring success.
As the energy landscape evolves, those who actively manage their energy procurement strategies will not only weather the challenges but also emerge as changemakers in a new era of energy sustainability and resilience.