The current market in Q3, 2023….
Context:
- Prices have plummeted from historic peaks that occurred in late 2022, but that doesn’t mean they are back to levels enjoyed pre-Covid. In fact, we are sitting around two to three times pre-Covid price levels.
- As we look further along the price curve we don’t see a major reduction in price until 2025.
- Price volatility is the new normal. It isn’t uncommon to see large intra-day price swings, with prices typically taking longer to fall than rise.
- Commodity costs are higher than pre-Covid.
- Non commodity costs are higher than pre-Covid with most customers seeing significantly higher standing charges thanks to OFGEM’s Targeted Charging Review shifting the cost weighting from the unit rate to the standing charge.
- Customers can no longer avoid consumption during Winter Triad (3x peak demand days) as a way to reduce costs.
Advice to customers:
With so many factors beyond the customer’s control, it is worth being informed, but pointless to panic. Instead we advise our customers to focus on what they can control.
Select a contract that is right for your needs….
- Pay attention to the contract fine print. Most “fixed” contracts are not what they seem. Many are fixed at forecast which means the supplier can reconcile costs mid-contract if they under-forecast. A good TPI will be able to help you navigate these subtle differences in contract styles. There is nothing wrong or right about either style of contract, they both have their pros and cons, but it is important to understand the differences to ensure the right fit for the consumer.
- Ensure you are comparing similar contract options to avoid making a miss-informed contract decision. You must check the fine print, or work with a TPI that can help you with the contract nuances. Each year we see consumers make miss-informed decisions and come to regret it when they receive the first bill and unanticipated costs appear. We help our customers to avoid this very mistake.
Go flexible….
- At the time of publishing (October 2023), the energy market is currently in Backwardation, i.e. near term prices are more expensive than prices further along the curve. If you are fortunate enough to qualify for a flexible contract, you can join the ranks of flexible contract novices who are securing this style contract for the first time. Flexible doesn’t have to be scary, we have multiple products and can find a good fit for your needs. In fact our most popular flexible contract is hands off, you leave the hard part to the commodity trading team to purchase your energy on the good buying opportunities.
Monitor the market….
- For most customers the overall trend is enough to help time the contract renewal, for energy intensive consumers pay closer attention, or go flexible, so you have a team paying attention for you.
Invest in energy efficiency and self-generation if economically viable….
- Don’t just call a solar power company, because all they will do is pitch you a solar power solution. The recommended first step on this journey is a low cost, solution agnostic site audit which will identify solutions and changes to make that will maximise the return of investment. These audits cost ~ £1,500 for a typical site, and enable you to discover what options are on the table, so you can decide which ones to pursue. Get in touch today so we can help you with an audit. It isn’t much work and should pay for itself with the energy savings identified for your site.
- Pay attention to volume tolerance if you are installing self-generation. You don’t want to invest in a new solar system, only to be charged by your supplier for under consumption. Get in touch if you need help navigating this issue.
Avoid contract sign off in Q1….
- Q1 (January – March), is the traditional “weather risk” quarter, cold weather increases gas consumption and drives up energy prices. Fortunately as we enter Q4, 2023 gas storage levels are high, demand is low and prices are competitive. Storage will deplete quickly during extended cold snaps. So don’t postpone 2024 contract renewal decisions until Q1, 2024. If you want to avoid prices pushed up by weather concerns, be proactive and secure your 2024 renewals now whilst conditions are competitive and conditions favourable.
Appoint your own MOP and DC/DA….
- Not only is it typically significantly cheaper to appoint your own MOP, DC/DA, it also gives you continuous access to your consumption data and reporting tools to help you monitor usage regardless of which supplier you sign with. A good DC/DA will ensure your consumption data works for you, not the other way around.
Peer to Peer purchasing….
- A different energy market calls for a different solution. A Peer to Peer (P2P), energy exchange circumvents the wholesale market, allowing Renewable Energy Generators to export their energy to consumers, essentially cutting out the middle-man. Renewable Energy Generators take home higher profit and Energy Consumers secure affordable, fully traceable, renewable energy. Thanks to fair and reliable pricing all participants avoid the costs associated with engaging in the traditional wholesale energy market.
- We offer contracts for Prosumers, i.e. customers that both consume and generate power. It could be from the same site, or different sites, so you can generate power at one location, and consume that power at another.
Consider a Price capped product….
- To guarantee that your price will never be higher than the cap, but could be lower if market conditions permit.
In short, at Direct Power will bring more than two decades worth of industry experience to your account. We will listen to your needs, help you with contract, price, monitoring and efficiency solutions in a timely and efficient manner. We will be your energy accomplice. Get in touch to discuss how we can best assist you on your energy journey.
