Matrix group have said they think energy suppliers will find it difficult to sustain their margins. Although current margins are reasonably high, the combined effect of volatile markets and increasing commodity prices are set to reduce profit.
Adam Forsythe, Head of Electricity and Utilities of Matrix Group warns of market volatility due to the unpredictability of wind power: “As more wind power comes online the market will become more volatile.” The intermittency of wind will contrast with the stability, yet limited use of nuclear creating higher peaks and lower off-peaks, meaning margins come under pressure at the supply end of business.
The Matrix Group analyst has said the recent Electricity Market Review will be costly as it enforces variety of supply and investment into low carbon technologies: “Recent policies will put pressure on supply, as these are not the cheapest options.”
However, Mr Forsythe does see at least one positive outcome for the end user: “There does appear to be some value in the working-capital benefit of consumers paying by direct debit, who end up paying in advance.”