Volatile energy market: testing times call for sustainable solutions

07 October 2022

With prevailing energy market conditions causing sharp price hikes that show no signs of abating – what can you do and who do you turn to for advice and viable solutions?

Since the beginning of 2021, negotiated contract pricing for large commercial customers has increased from 11c/kWh to 18c/kWh for a three year period. This means a customer using one million kWh per year is paying $70,000 more for electricity per year than 19 months ago. 

Mass market customers have not been impacted to the same degree with pricing moving from 9c/kWh to 12.5c/kWh.

Rather than bore you with the (too numerous) details and interrelated factors that have caused this unwelcome turn of events, let’s explore the options open to businesses to mitigate sky high energy costs.

Time to turn to the experts?
Many businesses are turning to energy management consultancies to help them navigate the challenging energy markets and provide services to assist them to get the very best deal on their utilities. 

They are also hiring consultants to explore sustainable and renewable energy options to help them diversify their energy portfolio and give them maximum bang for their buck in terms of energy efficiency, pricing and carbon liabilities.

But according to Total Utilities Director Chris Hargreaves, it’s a case of ‘buyer beware,’ when it comes to hiring an energy management consultancy. He says the quality of service and outcomes vary dramatically.

“If it was my business, there are only a small handful of organisations I would consider using in New Zealand to obtain energy contracts on my behalf and to have the ability and insight required to properly explore efficiency and sustainable solutions.

“The consultancy industry for energy is not regulated, so effectively anyone can start up a business that offers procurement services,” he says.

Chris advises considering various factors before hiring a consultant, including how many procurements they conduct each year. The energy market is highly dynamic and energy retailers are entering and leaving the market at unprecedented rates and pricing models and practices are changing daily.

If the consultant or advisor you are using is not pricing in the market on a regular basis, then you are likely to get caught out by the market changes. Look for companies conducting over 100 procurement exercises per year (as an example, we average almost 350).

You should also establish whether your consultant reviews the entire market of energy retailers for pricing (we do), or just their favoured few companies (nope, not us). 

Also, does your advisor or consultant gather detailed market intelligence to track wholesale pricing and industry developments? Do they warn you of potential ‘gotcha’ clauses to look out for in energy contracts as part of their procurement process? Needless to say, Total Utilities ticks all these boxes.

Aside from engaging a reputable energy management consultancy to help you traverse choppy utility waters, Chris explains there are various ways to hedge against rising costs, to minimise budgetary risk and ensure you comply with regulatory requirements.

Cost saving starts with sustainability & efficiency 
He says that first and foremost, now is the time to explore efficiency, sustainability, and low carbon solutions to increase resiliency. 

“By exploring sustainable solutions such as LEDs, Renewable Energy Certificates, solar and energy conservation methods, you can achieve short term wins and relief from volatile energy prices, whilst also unlocking long term sustainability benefits and future proofing your business.

“Sustainability not only saves money by creating energy efficiencies, it also decreases your reliance on the grid, so you are no longer at the mercy of volatile energy prices,” he adds. 

Keeping the lights on
One of the trends we’re seeing in the industry is a move away from centralised, utility based generation – to so called ‘distributed generation.’ This is a shift from a single source to many sources to allow for increased resiliency and reduced reliance on the grid. 

For example, traditionally if the grid goes down, you have no real option to keep your business going. But if you have solar with battery storage, you might be able to keep the lights on until the grid comes back online. 

Additionally, you avoid the full impact of market volatility if your energy sources are distributed – it goes back to the wisdom of the old proverb, ‘don’t put all your eggs in one basket.’

Talk to us
A great place to start when it comes to navigating the ever-changing energy markets is to talk to our team at Total Utilities. Our data-driven approach, born out of comprehensive investigations and analysis, allows us to carefully tailor energy services and solutions to your business.

With our proven 20 plus years in the energy business, we negotiate over $400 million worth of energy contracts for our clients every year. We can leverage relationships to get you better prices.

Our detailed pricing analysis and tendering services help save time and money by pinpointing the best possible energy contracts and ensuring the most favourable terms and prices.

We put sustainability, cost saving and energy efficiency at the heart of our clients’ businesses, so that they can be both sustainable and highly profitable. 

And in this environment, setting sustainability and carbon reduction targets isn’t just about reducing your environmental impact – it simply makes good business sense.

Contact us to find out more about our energy management consultancy services.

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