19th June 2020 – Over half of businesses have a firm grip on ways to counter common risks to energy supply chains and management, according to research conducted by Gazprom Energy, the UK’s leading business gas supplier.
Gazprom Energy carried out research among over 200 energy decision makers, working in large businesses, to better understand the challenges they face today. The research showed that 81% of businesses considered price changes to be the biggest risk to their energy supply. Some businesses may have benefitted from the recent price drop, brought on by Covid-19, if they have been able to switch or buy during this time, while others may be frustrated that they were unable to do this.
Another key risk for business is energy restrictions, such as consumption restrictions put in place due to shortfalls, with 81% of recipients listing this in their response. This is followed closely by economic and geopolitical issues at 79%. Most businesses claim they are currently taking steps to mitigate these risks, or plan on doing so within the next year.
When it comes to tackling energy restrictions, 54% of respondents claim they do so by managing down consumption, with a further third planning to do this within the next year. In fact, 52% are taking it further and investing in innovation to reduce consumption, with 36% saying they have plans to do this imminently. This is unsurprising, since 92% say that economic factors, such as demand-driven changes to energy prices, will impact their use of energy. As energy is one of biggest overheads for large businesses, customers are increasingly seeking to gain better control over their monthly outgoings.
It is still crucial for businesses to take steps to mitigate risks during the coronavirus pandemic to avoid additional financial impact, particularly with the likelihood of the impending global economic recession. This means a move away from estimated bills is expected, through the harnessing of new technology, to help manage energy consumption with increased accuracy, something that is now more important than ever. Customers of all sizes need greater transparency, with more emphasis on the provision of data, making this a core part of an energy supplier’s service.
54% of businesses claim to have improved their energy supplier relationship, which has not only boosted the service they receive, but also put them in a better position to negotiate a good deal in the future to keep prices low. A further third plan to do this within the next year. Although the businesses that have had to close sites during lockdown may be using no energy, they should be aware that may still be billed for a standing charge. For businesses experiencing financial difficulty, communication with their supplier is even more vital to explore payment flexibility options as well as other support available.
The results showed that nearly half (47%) of businesses are tackling price changes and economic issues by monitoring market fluctuations to predict wholesale price changes, with 38% planning to do this in the next year. A total of 44% of respondents are currently forecasting changes in energy charges and prices, while 41% have plans to do this. Many businesses are prepared for energy price rises, however, gas prices have in fact dropped to a multi-year low in recent weeks. Businesses should consider what energy contract is right for them at this time to secure the best possible rate with the lowest possible risk.
Mark Doyle, Corporate Accounts Manager, at Gazprom Energy said: “When it comes to energy management, large businesses tend to be prepared for potential risks and are aware of the correct steps they should be taking to mitigate threats in a number of areas. Although we could not have predicted the impact of Covid-19 and we are still unclear of its medium to long term effects, maintaining relationships with energy suppliers will be instrumental in how businesses can overcome the possible challenges.”
This research was completed before the Covid-19 outbreak that has brought new challenges to the market. Energy will continue to be a key overhead for businesses operating with limited budgets, meaning that energy management will be crucial when reopening and/or returning to the workplace, in order to keep costs down. Companies may be saving money this year due to their current consumption being reduced or even reaching zero, but businesses should continue to look to the future and plan a viable energy strategy for reopening and/or returning to the workplace.
Research was conducted among 216 respondents working in companies with 100+ employees with decision making responsibility over energy, with an annual gas consumption of more than 732,000 kWh. At an overall level results are accurate to ± 6.7% at 95% confidence limits assuming a result of 50%. The interviews were conducted online in in December 2019 using an email invitation and an online survey.
You can access the full research here.
