Why energy management will be key for businesses

Read Time: 3 Min

A fluctuating energy market that has experienced a number of providers going bust, combined with a growing green agenda, means that there is an increasing need for businesses to use third parties to effectively manage and optimise their energy solutions, and help them to track and deliver their sustainability objectives.  

Help with rising costs

It may not have escaped your notice that we’re in somewhat of an energy crisis. There are a number of reasons why prices are rising at the moment: a long cold winter in 2020/21; Brexit; gas shortages; high demand for liquified gas from Asia; low winds impacting renewable energy sources; and a fire at a National Grid site in Kent, have all had an impact, as this handy Bionic guide explains. 

For businesses this means they’re likely to be hit with rising costs – immediately if you’re on a standard variable tariff, or the next time you switch deals if you’re on fixed-rate. 

Navigating rising costs is tricky at the moment, as there are very few deals in the market, however companies such as ECI portfolio company, Bionic, can help businesses to assess if there are any savings to be made, including whether they might benefit from the protection of a longer-term deal, especially with predictions that costs will continue to rise in 2022. With things moving so quickly, having access to market expertise and advice may help navigate these increased costs, assessing the true tariff costs with a relevant risk assessment, and associated fees and charges. 

Energy market disruption

Ten domestic energy suppliers have gone bust in the last eight weeks, in part in response to the rising wholesale prices creating unsustainable margins, and in part due to a number of start-up energy companies who had used cheaper tariffs to woo new residential customers and could not maintain the cash-flow needed to continue. This market disruption, which so far has impacted about 720,000 customers in 2021 alone, is likely to continue, with further anticipated rises in wholesale prices. Bankruptcies such as Spark Energy also highlighted the cost of government obligations as an added pressure, after it went bust following an announcement of a missed deadline to make a £14.4 million renewable energy payment. Only a few weeks ago, Bulb, the UK’s sixth largest energy company, also stated it was seeking a bailout to say afloat. 

This disruption means many households will have to be moved onto Ofgem’s ‘Supplier of Last Resort’ to ensure gas and electricity won’t be cut off. Whilst this provides no immediate concern for companies it does mean that businesses may no longer be on the cheapest tariff, and business owners will have to take the time to assess other suppliers if they want to move. Given that time is in short supply for business owners, and this period of disruption may be prolonged, it is likely many will look to efficiently manage this process through outsourced energy switching providers.   

Going green 

Sustainability is a key consideration for businesses in 2021, and many are looking to third parties in helping them to go green. That might take the form of support on setting a sustainability agenda and targets, measuring your carbon footprint, reducing the amount of energy used, installing a smart meter or switching to a renewable tariff. 

Thinking through a green energy strategy for the next decade will important, with businesses looking to ensure not only that they are becoming more sustainable, but that the businesses in their supply chain are too. 

The current COP26 summit is a reminder of the drastic measures that may be needed if we are to hit the Paris Climate Agreement target of holding global temperature rises to well below 2°C. For this to be successful, politicians and business leaders will need to engage to encourage the adoption of new norms and incentives, and there will be likely be more scrutiny around compliance with regulations. 

Companies will need support not just in this period of disruption, but in the longer term as they look to deliver on both their own – and the government’s – long-term sustainability strategy. 

About the author

Richard Chapman

"I enjoy leading deals at ECI and have invested in lots of different areas including healthcare, restaurants, business services and tech-enabled services, to name a few. A large part of my role is post-investment, helping companies continue their growth organically and through acquisition, both in the UK and internationally."

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