Navigating today’s business energy market: What you need to know

The current state of the energy market

The energy market is a complex industry, which often presents unexpected challenges for those looking to get their next energy fix. For many businesses, managing energy costs today is more than just operational costs; this is an important factor that can affect overall profitability and long-term financial stability.
In this post, we’ll outline the current state of the business energy market and why many of the businesses you work with are likely facing new challenges in the wake of the energy crisis.

Market sensitivity: Volatile energy markets

Energy markets are on edge, and now react dramatically to even the smallest events. Since the energy crisis, market movements which would normally increase prices by 0.3p/kWh, have now pushed them as high as 3p/kWh+. These concerns extend to geopolitical and economic factors, not just security of energy supply, which is the main driver of rising energy prices.

Recently, the ongoing conflict in Ukraine has demonstrated this. Rising tensions in Russia’s Kursk region have caused gas prices to rise, reaching levels we haven’t seen in years. Even though gas continues to flow through Ukraine, concerns about potential supply disruptions reaching the wider European region are enough to keep markets on alert.

Unexpected events like these, as well as other market-driven factors that create unease in the markets, continue to impact the prices businesses pay for energy.

Market outlook: Preparing for a complex energy market

At the time this article was written, gas storage levels in Europe were at 86%—which seems like good news; However, this only provides security of supply in the short term, and is not a long-term solution. The energy prices paid by businesses in the UK and Europe are essentially driven by gas supplies from major shipping routes and LNG (Liquified Natural Gas) shipments.
Even as the gas storage target of 90% is close to being achieved before winter, the situation remains precarious, with the potential for further increases to disrupt gas supplies and heavy reliance on LNG imports – all factors causing market volatility that could lead to further price increases .

Simplifying the complexity of energy renewal

In this volatile market, waiting to get an energy contract can be a costly mistake. Encouraging your clients to dive into the market now and review their energy renewal costs is a proactive strategy that optimizes their future energy budgets. By doing this, they can avoid potential price spikes that may occur in the coming months and begin to understand price positions for critical operational costs.

Understanding energy market drivers and analysis can play an important role in helping clients identify the right combination of procurement strategies aligned with their energy needs and financial objectives, ensuring that they are not over-exposed to market risks and premature price increases.

Why now is the right time to act: The consequences of inaction

Energy markets are not only volatile—they are also unpredictable. What is true today may not be true tomorrow. This uncertainty makes it even more important for businesses to act quickly and decisively. Waiting for the “right time” to secure an energy contract or implement efficiency measures can result in missed opportunities and higher costs.

At Swoop, we understand the challenges businesses face in today’s energy market. Whether you’re an advisor helping your clients understand their energy bills or a broker looking for the best deals, we’re here to support you. Our team of experts is ready to provide the insight and guidance you need to help your clients navigate this volatile market with confidence.

How you can help your clients

Through our energy partners, we can produce competitive energy offers for your clients. If you send us their latest energy bill, we can provide a quote within 12 months of their contract end date. This is a great opportunity to help your clients manage energy costs in this volatile market.

General Questions

1. What is causing the current volatility in energy prices?
   The main drivers of current volatility are geopolitical tensions, particularly in Ukraine, supply chain disruptions and ongoing infrastructure maintenance. These factors create uncertainty in the market, leading to frequent and significant price fluctuations.
2. How can getting an energy contract now help my clients?
   By getting an energy contract now, or at least going to the market to estimate energy renewal costs, your clients can secure pricing and protect themselves from potential future increases. This strategy provides a level of cost certainty in an unpredictable market.
3. What are some simple ways my clients can reduce their energy costs?
   Understanding energy consumption and usage profiles is a good start. Encouraging your clients to invest in energy efficiency measures is a good start. This could include upgrading lighting or investing in energy-efficient systems. These changes can reduce energy consumption and lower bills over time.
4. How do global events affect energy prices?
   Global events, particularly those impacting major energy producing regions, may cause supply disruptions or fears of such disruptions. This uncertainty often results in price spikes as the market reacts to potential reduced supply.
5. What should my clients do if they are unsure about their energy bill?
   If your clients are confused about their energy bills, we can help by breaking down the costs and explaining how their invoices consist of the costs listed on their bill. Understanding their bill can also help identify areas for potential savings.

For more detailed advice and customized solutions, contact our team. We are ready to help you and your clients through these difficult times in the energy markets.