Across the East Coast of Australia, business owners are facing significant cost imposts with surging gas and electricity bills as a major energy crisis grips the energy market. We have recently seen some businesses foreshadowing the impact of the rising forward prices for electricity by changing their outlook on investment and staffing levels.
Market participants generally agree that higher energy prices are here to stay, at least in the short term, but there are steps that commercial users can take to assist in managing these risks and associated costs.
While the recently announced initiatives from the industry and both State and Commonwealth governments are welcomed, many of these projects have a lead time of some 3-5 years. If your contract is expiring in the next 6-12 months, you have a “real-time” problem that needs a “real-time response”.
Here’s everything you need to know about recent developments in the electricity and gas markets, and how you can address the impacts within your business.
The structural causes of the Australian energy crisis mean that higher gas and electricity prices – along with increased market volatility – are unlikely to abate in the short term:
These factors have raised the very real prospect of a severe energy supply crunch, potentially including load shedding and severe blackouts across the eastern states next summer.
Following the laws of supply and demand, these energy shortages are already causing power prices to increase dramatically, and the situation is likely to continue.
February was a particularly tumultuous month in both the spot and retail contract markets, with every state experiencing multiple very high-priced days as the mercury rose across the eastern and southern states:
On the ground, many business owners and managers are already reporting that their energy contracts are now double or triple what they were just a few years ago.
Especially if you’re in an energy-intensive industry (such as manufacturing), these higher gas and energy prices can cause serious cash flow issues that can impact the sustainability of your business.
Carefully time when you go to market on your next energy contract, choosing the right contract term, and taking steps to improve and manage onsite levels of energy efficiency can have a massive impact on your company’s energy costs.
Some of the key steps businesses should be considering include:
If your business gets this right, it can provide cost advantage over other local competitors who don’t have an energy strategy, and who are subsequently left paying significantly more for their power bills.
However, the optimal procurement strategy and negotiating the right contract terms takes time to implement. Because of this and considering the importance of timing when it comes to approaching the current energy market, you will need to begin acting now to seize the opportunity.
Energy Action offers a range of tailored services that can help your business assess, improve and manage onsite levels of energy efficiency through the use of innovative energy efficiency and energy management initiatives.
With the right advice, your business can gain a competitive advantage by proactively adapting to the new realities of Australia’s energy market while your rivals continue suffering from bill shock.