Impact and Opportunities from Covid-19

As we contemplate the transition from the lockdown put in place to mitigate the impact of the Covid-19 pandemic, what will the road ahead look like for our energy and carbon emissions?

As we contemplate the transition from the lockdown put in place to mitigate the impact of the Covid-19 pandemic, what will the road ahead look like for our energy and carbon emissions? As with all situations, there will be winners and losers.

During the start of the UK’s lockdown, energy prices continued to fall off the back of weakening demand, oil market prices falling to a two decade low of $43/barrel and a glut of gas within the UK gas network system along with continued imports of LNG.  Whilst prompt market prices saw the greatest reduction, a lot of consumers switched from flexible to fixed energy contracts, and there was a lot of procurement activity as users locked in to longer term contracts to secure favourable market prices for up to three or even four years ahead.

However, even though energy consumers can benefit from lower wholesale energy prices, it won’t all be good news, as temporarily vacated properties, altered shift patterns and site closures have essentially had a direct impact on reduced consumption, concerns surrounding contractual balancing charges may start to come to the fore.  Suppliers will be reviewing how they have been adversely affected by the significant drop in end-user consumption and whether they will be hit with any form of balancing charge penalties and if so, to what degree.  Subsequently, there could be concerns surrounding the direction and magnitude of some future 3rd party electricity charges.

As the UK and other countries have slowly started to come out of lockdown and restrictions are eased, demand has been quietly ticking up, which has been mirrored in an increase in energy and oil market prices from their recent lows.  Consumers that were well prepared with a good procurement strategy backed up by accurate and accessible data were able to take advantage of this window of opportunity and can now look to other opportunities to reduce their consumption and costs.

Increased non-commodity costs over the past decade means that investing in energy performance and optimisation projects still provide a return on investment and a reduction in carbon emissions.  Organisations that are already effectively managing their energy will already have an energy and carbon management system in place that gives them a detailed view of all their data on cost and consumption.  Identifying the best projects to invest in, backed up by a solid investment case is crucial to making the right decisions and identifying the best investment opportunities.

The devil is in the detail and the detail is in the data.

Visit Optima Energy to find out more.

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