The effect of Lockdown 2 on energy procurement strategy

Whilst not as severe in its restrictions nor hopefully as long in duration as the first national lockdown in March, ‘Lockdown 2’ will inevitably lead to a nationwide reduction in energy use.

More businesses will either go to the wall or temporarily close their doors and encourage home-working wherever possible, leaving vast swathes of office floor space empty.

Meanwhile, non-essential retail outlets will put up the ‘Closed’ signs as of one minute past midnight on Thursday morning, and pubs, cafes and restaurants unable to provide takeaway food will also be left eerily quiet.

At the end of March, less than two weeks into the initial period of restrictions, electricity demand dropped by as much as a tenth as businesses were forced to close their doors as part of the measures introduced to curb the spread of coronavirus.

GB day-ahead electricity prices fell 10 per cent as a result compared to the previous week and the downward trend largely continued until lockdown restrictions slowly started to ease in mid-May when prices did a U-turn and increased again. Not all of these price wholesale price drops, however, were passed on to customers, at least not in the initial stages.

Whilst planning for the future is never easy at the best of times, let alone during the uncertainty of living through a global pandemic, an effective energy procurement strategy will help mitigate against some of the peaks and troughs.

Flexibility

Business energy deals offer a wide procurement window for tendering contracts and are more flexible than those available to domestic users in that they can be fixed from anything up to four years.

Business energy is also cheaper per unit of electricity and gas used, but it is important to be aware of associated non-energy costs, such as the Climate Change Levy (CCL), when considering which contract to sign.

Non-energy costs are those that are incurred around the purchase and supply of energy rather than the actual unit spend on gas and electricity and have risen incrementally in the last few years to form a larger percentage of the overall energy bill.

100 per cent accuracy in forecasting price changes is impossible given there are so many external factors involved, such as a change in government policy or unseasonable weather.

But, at Energy Management, we have the monitoring capability and in-house expertise to help clients make better-informed decisions about the type and length of the energy contract best suited to their needs.

If you’d like to use the latest lockdown period to do some energy ‘housekeeping’, please get in touch on 01225-867722.