The ongoing conflict between Russia and Ukraine has had far-reaching implications across the world, and one area that has been significantly impacted is global energy prices. Russia is one of the world’s largest producers of oil and gas, and its actions in Ukraine have led to concerns about the security of energy supply through out the UK and Europe.
In This Blog
We will explore how the Russian invasion of Ukraine has impacted global energy prices, and specifically, how it has affected business energy prices in the UK.
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Impact on Global Energy Prices
The Russian invasion of Ukraine has led to a number of factors that have impacted global energy prices. These include:
- Sanctions: Following Russia’s actions in Ukraine, the US and EU imposed economic sanctions on Russia. These sanctions have restricted the ability of Russian energy companies to access global capital markets, which has impacted their ability to invest in new projects and maintain existing infrastructure.
- Supply concerns: The conflict in Ukraine has led to concerns about the security of Russian energy supplies. Any disruption in Russian energy exports could have a significant impact on global energy prices.
- Increased demand for energy alternatives: In response to concerns about the security of Russian energy supplies, many countries have sought to diversify their energy sources. This has led to increased demand for alternative energy sources, such as liquefied natural gas (LNG) and renewable energy.
Impact on Business Energy Prices in the UK
The impact of the Russian invasion of Ukraine on global energy prices has had a direct impact on business energy prices in the UK. The UK is heavily dependent on natural gas imports, and much of this gas comes from Russia via the EU. As a result, any disruption to Russian gas exports can have a significant impact on energy prices in the UK.
In addition to the impact on natural gas prices, the conflict in Ukraine has also led to increased oil prices. This has had a knock-on effect on other energy prices, as oil is often used as a benchmark for pricing other energy sources.
Furthermore, the sanctions imposed on Russia have made it more difficult for Russian energy companies to access global capital markets. This has impacted their ability to invest in new projects and maintain existing infrastructure, which could lead to supply disruptions in the future.
Overall, the impact of the Russian invasion of Ukraine on global energy prices has had a direct impact on business energy prices in the UK. As energy prices are a significant cost for many businesses, the impact of these price increases can be significant.
Our blog on Behind The Headlines: What is really impacting energy costs, takes a closer look.
What can businesses do?
The impact of global events and market fluctuations on energy prices can create challenges for businesses looking to maintain financial stability and growth. Mitigating risks associated with energy price increases is a vital aspect of managing a successful business these days.
Here are the key strategies your business can explore explore to mitigate the risk of energy price increases.
Energy Efficiency Measures
One of the most effective strategies for mitigating the risk of energy price increases is to improve energy efficiency. Businesses can achieve this by making simple changes such as switching to energy-efficient lighting, improving insulation, and using smart technology to control energy usage.
More significant changes include upgrading equipment to more energy-efficient alternatives, implementing demand-response programs that reduce energy usage during peak times, and investing in renewable energy solutions such as solar panels.
By reducing energy consumption, businesses can not only lower their energy bills but also decrease their overall reliance on energy from external sources, thereby reducing their exposure to energy price increases.
Energy Procurement Strategy
This is an increasingly difficult task: the increases have been fuelled largely by ‘the energy crisis’ as well as the cost of supporting more low carbon generation and upgrading infrastructure to accommodate a changing energy system. This means there’s now pressure on both sides of the bill, with increases in both wholesale (commodity) and non-commodity costs (taxes, levies and system charges).
Our procurement strategies can ensure your business mitigate the risk of energy price increases and develop a comprehensive energy procurement plan. This involves evaluating the market and selecting energy suppliers that offer favorable pricing, flexible contracts, and stable pricing structures.
By working with us, we can help you navigate complex energy markets and identify opportunities for savings. They can also consider long-term fixed-price contracts that provide price stability and budget certainty.
You can find out more about our Utility Health Check here.
Deploying Low Carbon Technology / Generation
The use of low carbon technology and generation is becoming increasingly popular among businesses looking to reduce their energy costs and minimize their carbon footprint. By generating their own electricity using renewable energy sources, businesses can reduce their reliance on the grid and mitigate the risk of rising energy costs.
Low carbon technology, such as solar panels, means that businesses can generate their own clean energy while reducing their environmental impact. By using low carbon technology to generate electricity, businesses can reduce their energy consumption from the grid, which can help to lower their energy bills and reduce their exposure to rising energy prices.
You can find out more our low carbon technology solutions and Solar PV here
Added Value Solutions
Businesses can also use added value solutions and tools to mitigate the risk of energy price increases. These tools include kVA Capacity Analysis and Bureau Services.
kVA Capacity Analysis can lower your energy bill, without reducing your consumption. This is a charge which is nominated against your electricity meter for the maximum amount of power which can be drawn from the National Power Grid at any one time. By reviewing your kVA Capacity allowance from National Grid for your electricity meter, we can ensure you are paying for what you use and set this this allowance at the correct figure.
With Bureau Services, complicated, confusing and complex often comes to mind in the world of energy billing and invoices.
With our automated comprehensive system, we’re able to analyse and automate your billing validation services with ease – putting your mind at ease with accurate billing and freeing up resource and operational costs within your business.
Employee Education
Finally, businesses can mitigate the risk of energy price increases by educating their employees about energy efficiency and conservation. This can include providing training on energy-efficient practices, encouraging employees to turn off lights and equipment when not in use, and incentivizing employees to reduce energy consumption.
By creating a culture of energy efficiency within the workplace, businesses can significantly reduce their energy usage and costs, thereby reducing their exposure to energy price increases.
Summary
Overall, virtually all European countries are behind schedule on their pledges to cut emissions, become energy independent and deliver long term security of supply – but, the events of the past year have convinced most that we need to deliver these points faster and smarter.
The need to become energy independent is now more urgent than ever.
The impact of energy price increases on businesses can be significant. Businesses can use the strategies outlined in this blog to mitigate these risks, reduce their exposure to energy price increases and maintain financial stability and growth.
Find out how we can support your business during the energy crisis and develop a comprehensive energy procurement strategy with a sustainability policy.
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