Don’t wait to make crucial savings for your business…
Energy bills are driven by both the price of energy on the wholesale market and Third Party Costs (TPCs). TPCs include non-energy costs set by the government, network (the National Grid), policy and system costs and electricity transmission/distribution costs.
The biggest single cost on a bill is the price of the energy. The wholesale cost of the energy makes up approximately 45% of an electricity bill and 65% of a gas bill, with the remaining being TPCs, which have been continuously rising in recent years and can be volatile.
This pricing report focusses on the energy element of a bill to help you keep track and understand the wholesale energy market and the factors affecting the price of your contracts.
The Coronavirus pandemic has caused oil prices to plummet in price (by over 57% so far this year) and the FTSE 100 to fall to an 8 year low with many countries closing their borders and putting all residents on lockdown.
Already every business has had a productivity hit and if the Government enforce a lockdown in the UK, businesses will be under even more financial strain. To keep the cash flowing into your business, ensuring that you are helping to save as much as possible is the first thing you should be looking to do.
With the demand for energy dropping, prices are at one of their lowest points in 5 years, so now is the perfect time to lock in a lower rate for your business energy and reduce your overheads whilst offsetting turnover.
We can help with switching your energy today. As it can all be processed online it will not be impacted if the country goes on lockdown. Don’t wait to help make those crucial savings for your business and contact us today for a completely free energy audit!
Bearish Factors (downwards pressure):
Oil prices sliding by 57% this year at time of writing.
100 million people across Europe put on lockdown, reducing global stocks and the demand.
Despite demand continuing to drop, Saudi Arabia and Russia have promised to flood the market with oil as they are in an all-out price war for market share.
Gas and Power
Contract prices have decreased this week, weakened by the bearish trading within the markets.
Power demand is low and set to drop further as more businesses work remotely, which will help keep contract prices cheaper.
Gas demand is below seasonal norms and is set to drop further over the next couple of days as the temperatures continue to lift.
As the overall supply and demand outlook remains bearish as the spread of the coronavirus intensifies, contracts continue to trade lower.
Brent has dropped by 57% so far this year, since reaching $68.91/bbl in Jan.
Demand loss forecasts for oil have only gotten more extreme as the world enters uncertain territory, with Russia and Saudi Arabia flooding the markets and more countries going into lockdown.
Current price standings:
Brent Crude = $29.42/bbl
WTI Crude = $25.76/bbl
Europe on Lockdown
Europe is now reporting new COVID-19 cases at a rate that outpaces China during the peak of its outbreak.
With the UK government now advising staying at home while France, Spain and Germany enter into near-total lockdowns and the US likely not far behind. More countries seek to restrict flights, ban mass public gatherings and close all non-essential shops.
Airlines are predicted to cut flights by up to 80% in the next two months and the enforced lockdowns will lead to a drop in economic activity, nightlife and leisure. This will see the demand for power drop across Europe, thus keeping energy prices low.
The closure of schools & universities in many nations across the continent will also contribute to the drop in demand. EDF is confident that it can sustain power generation for “12 weeks even with a 25% reduction in staff”, with activity maintained for 2-3 weeks even if the workforce were to be impacted by 40%.
Not much been able to outweigh panic that has now firmly set in. Markets are rebounding in a pattern we’ve seen over the last couple of weeks caused by “panic buying”.
The FTSE 100 has fallen below 5,000 point mark for the first time since 2011, with every single share down on another day of selling. The FTSE 100 has lifted 2% this morning after losing 4% yesterday.
President Donald Trump has stated that the US ‘maybe’ headed towards a recession. However, Goldman Sachs has predicted the country ‘is’ heading towards a recession.