Navigating the current business energy markets: What you need to know

The energy market is a complex industry, which often presents unpredictable challenges for those looking to secure their next energy renewal. For many businesses, managing energy costs is more than just an operational cost these days; it’s a significant factor that can influence overall profitability and long-term financial stability.
In this post, we’ll break down the current state of the business energy market and why it’s likely, many of the businesses you work with are facing new challenges in the aftermath of the energy crisis.

The energy market is on a knife edge, and now reacts dramatically to even the smallest events. Since the energy crisis, market movements that would normally increase prices by 0.3p/kWh, are now pushing them as high as 3p/kWh+. This nervousness extends to geopolitical and economic factors, not just security of energy supply, which is a key driver for energy costs.

Recently, the ongoing conflict in Ukraine has demonstrated exactly this. Escalated tensions in the Kursk region of Russia have caused gas prices to increase, reaching levels we haven’t seen in years. Even though gas continues to flow through Ukraine, the fear of potential disruptions of supply reaching wider Europe, is enough to keep the market on edge.

Unforeseen events such as this, along with other key market drivers that bring nervous market sentiment, are continuing to impact the price businesses pay for energy.

At the time of writing, Europe’s gas storage levels are at 86%—which sounds like good news; however, this is only providing security of supply in the short-term, it is not a long-term solution. The price businesses in the UK and Europe pay for energy is fundamentally driven by the supply of gas from key delivery routes and LNG (Liquified Natural Gas) deliveries.
Even with gas storage targets prior to winter of 90% almost achieved, the situation remains precarious, with the potential for further escalations that could disrupt gas supplies and a heavy reliance on LNG imports – all factors that set the stage for volatile markets that could lead to further price increases.

In this volatile market, waiting to secure an energy contract can be a costly mistake. Encouraging your clients to go to market now and review their energy renewal costs is a proactive strategy optimising their future energy budgets. By doing so, they can avoid the potential price spikes that could occur in the coming months and begin to understand a price position for essential operating costs.

Understanding energy market drivers and analysis can play a crucial role in helping clients identify the right combination of procurement strategies that align with their energy needs and financial objectives, ensuring that they are not overly exposed to market risks and untimely price increases.

The energy market isn’t just volatile—it’s unpredictable. What’s true today might not be true tomorrow. This uncertainty makes it more important than ever for businesses to act quickly and decisively. Waiting for the “perfect time” to secure an energy contract or implement efficiency measures could result in missed opportunities and higher costs.

At Swoop, we understand the challenges that businesses face in today’s energy market. Whether you’re an advisor helping your clients make sense of their energy bills or a broker looking for the best deals, we’re here to support you. Our team of experts is ready to provide the insights and guidance you need to help your clients navigate this volatile market with confidence.

Through our energy partner, we’re able to generate competitive energy quotes for your clients. If you send us their latest energy bills, we can provide quotes within a 12-month window of their contract end date. This is a great opportunity to help your clients manage their energy costs in this volatile market.

1. What is causing the current volatility in energy prices?
   The main drivers of current volatility include geopolitical tensions, particularly in Ukraine, supply chain disruptions, and ongoing infrastructure maintenance. These factors are creating uncertainty in the market, leading to frequent and significant price fluctuations.
2. How can securing an energy contract now help my clients?
   By securing an energy contract now, or at least going to market to forecast energy renewal costs, your clients can secure prices and protect themselves from potential future increases. This strategy provides a degree of cost certainty in an otherwise unpredictable market.
3. What are some simple ways my clients can reduce their energy costs?
   Understanding their energy consumption and usage profile is a great start. Encouraging your clients to invest in energy efficiency measures is a great start. This could include upgrading lighting or investing in energy-efficient systems. These changes can reduce energy consumption and lower bills over time.
4. How do global events affect energy prices?
   Global events, especially those that impact major energy-producing regions, can lead to supply disruptions or fears of such disruptions. This uncertainty often results in price spikes, as the market reacts to the potential for reduced supply.
5. What should my clients do if they’re unsure about their energy bills?
   If your clients are confused by their energy bills, we can help by breaking down the charges and explaining how their invoice is made up of the charges itemised on their bill. Understanding their bills can also help identify areas for potential savings.

For more detailed advice and tailored solutions, reach out to our team. We’re here to help you and your clients navigate these challenging times in the energy market.