Current Energy Market – 10th May 2020

B2B Energy and Telex UK have been working together directly now for 18 Months, although both Directors have known each other for many years. Last week they had an in-depth conversation regarding the impact on the energy market that Coronavirus brings. This has had a significant impact on the world, and it has affected everyone. I wanted to share with you today what we are witnessing from the energy market and what both Adam and I shared.

It is believed that renewables will be the only energy source to grow this year as countries shut down during this pandemic. These areas of energy resource can be left to operate with minimal support and activity that other resources require daily. We have seen global energy demands reduce by 6% in 2020 due to the restrictions put on industry in what would be the largest reduction in industry output on record, never has this been seen in our lifetime.

On a good note from the environment stance there has 2.6 billion tonnes of carbon dioxide reduction from energy use, reduced commuting, and international travel. It is believed that there will be an annual reduction of carbon dioxide emissions in the region of 8% which is the biggest since the World War 2.

One of the biggest impacts of all of that we have seen is ‘Oil’ barrel costs dropped to a negative figure last week because oil companies cannot store the oil, because of the massive reduction in demand oil companies were paying to have it taken. Therefore, on the Forecourt we are seeing reduced pump prices. Below is the RAC Fuel Watch across the UK.

Electrcity and Gas

I asked the question to Adam Zeiderman, the Managing Director of Telex UK to give me his view on what is happening in the marketplace.

“As we start to emerge from lock down in the coming weeks, many businesses are focusing on survival, recovery and future growth. It will be important for them to ensure costs are kept to a minimum to maximise profit wherever possible.

Following a mild winter and the onslaught of Coronavirus at the start of this year, wholesale gas and oil costs have dramatically fallen over the last 6 months. As stock levels have remained high and demand has reached new lows, which in turn has made the cost of electricity production cheaper.

Whilst some of these falls in commodity costs have been slightly offset by increases in non-commodity costs (transportation, network charges, government subsidies), the overall unit cost for gas and electricity has in most cases fallen versus a year ago.

Now is a good time for businesses to start looking at current and future costs for their gas and electricity, to see if they can take advantage of lower market costs and deliver long term budget certainty. Whilst maintaining a focus on ways to reduce ongoing energy usage.

Telex UK are helping 100's of customers do this, they are a highly customer centric consultancy who are successfully helping businesses better understand, procure, manage and monitor their energy costs.”

This is all great for Business’s and the individual regarding Transport fuel costs as this is addressed immediately at the pumps. But Gas and Electricity contracts are not immediate, suppliers do not have to honour these reductions until a contract has been renewed. So, though the market is down energy prices in your home and Business are likely to stay the same, until challenged.

There is a high percentage of contracts that have lapsed and that are out of contract and have never been put into contract. These can be addressed very quickly. However, due to Social Distancing and Lockdown it is very hard too actually get to speak to someone. By working with ‘Energy Experts’ who have access to account managers who are working from home then it is likely new commercial contracts can be put in place.

Rates on a deemed contract are considerably more expensive, on average 80% more, than agreed rates. These are likely to stay like this unless you or an energy expert contacts your supplier.

Paul Webb, Be Safe

www.b2benergy.co.uk