Post - Blog
Navigating the evolving energy landscape
- 2 months ago (2024-07-31)
- Junior Isles
By Chris Maclean, CEO, True, powered by Open Energy Market
EP Shanghai 2024
Thomas Marzec-Manser, Head of Gas Analytics, Independent Commodity Intelligence Services (ICIS), recently warned against jumping to conclusions about the end of the energy crisis. Economic challenges persist, and while energy markets might seem stable, there are hidden vulnerabilities.
The ongoing cost of living crisis has led to reduced consumer spending, impacting industries like hospitality. Additionally, the manufacturing and production sectors, both essential for economic growth, have faced operational challenges amidst supply chain disruptions and rising input costs. This subdued demand, coupled with lingering concerns over geopolitical tensions and supply chain bottlenecks – particularly in regions crucial for energy production and transportation – underscores the volatility of the energy market.
It’s a timely reminder for businesses to take a forward-thinking approach to energy management. By closely monitoring market trends, identifying emerging risks, and implementing robust risk mitigation strategies, organisations can better navigate the evolving energy landscape.
Embracing smart energy management
Effective energy procurement is vital for financial stability and operational resilience. By anticipating market trends and seizing opportunities to make the energy market work in their favour, businesses can optimise energy costs while ensuring a reliable supply. This proactive approach enables businesses to mitigate the impact of price fluctuations, minimise exposure to market volatility, and maintain budget predictability.
Sustainability through renewable strategies
In addition to driving financial savings and enhancing operational resilience, strategic energy procurement plays a crucial role in advancing sustainability goals for businesses. By adopting proactive strategies that prioritise renewable energy sources, organisations can significantly reduce their carbon footprint.
One key way that strategic energy procurement promotes sustainability is through leveraging power purchase agreements (PPAs). PPAs are contractual agreements between energy buyers and sellers.
In a physical PPA, the buyer purchases electricity directly from a renewable energy generator and receives delivery of energy to its facilities. In a financial PPA, the buyer does not take physical delivery of the electricity but instead enters into a financial agreement with a renewable energy generator to purchase renewable energy certificates (RECs) or guarantees of origin (GOs) associated with the renewable energy production. The buyer receives financial benefits in the form of renewable energy credits, which can be used to offset their grid-based energy consumption or demonstrate their commitment to renewable energy procurement.
PPAs offer several key benefits for energy buyers including price stability, cost savings, bolstered environmental credentials, and risk mitigation. Put simply, PPAs offer a flexible and customisable mechanism for businesses to access renewable energy, achieve their sustainability objectives, realise financial benefits and minimise operational risks.
The Open Performance Fund (OPF): A Longer-Term Play
Trading energy in the market is an option for businesses with high energy consumption, but it’s complex and risky. For medium to large enterprises looking for a simpler and more reliable solution, the Open Performance Fund (OPF) is a great choice.
The OPF is a long-term buying strategy designed to secure sustainable cost savings and reduce trading risks over time.
One of its key features is its consistent outperformance in energy cost savings compared to the broader market. In fact, the OPF consistently surpasses the 12-month rolling market average across both gas and power markets.
Besides cost savings, the specialists behind the OPF also help to simplify energy procurement by handling market monitoring, decision-making, and execution, allowing businesses to focus on their core operations with peace of mind.
Strategic energy procurement and sustainability in practice
One organisation that has successfully navigated the complexities of the energy market is Shepherd Neame, Britain’s oldest brewer. Over the past four years, Shepherd Neame has partnered with True to optimise its energy procurement strategies and drive significant cost savings.
Through strategic energy procurement and participation in the OPF, Shepherd Neame has achieved remarkable savings of 49.9 percent against the average price of energy. This translates to millions of pounds in savings over four years, enabling Shepherd Neame to reinvest in its operations and sustainability initiatives.
In doing so, Shepherd Neame is driving operational efficiencies while reducing its carbon footprint. The brewery’s holistic approach to sustainability can serve as a blueprint for businesses looking to balance commercial growth with environmental responsibility.
Staying one step ahead
As the energy landscape evolves, businesses must be proactive in their energy procurement strategies. By staying ahead of market uncertainties and embracing sustainability, they can achieve financial resilience and environmental stewardship simultaneously.
For more information about True, powered by Open Energy Market, visit https://www.truezero.tech/