BSEE-MAR22-PG05_Layout 1 22/02/2022 09:58 Page 5
NEWS
BSEE
Report reveals critical factors behind soaring commercial energy prices
n a new report, experts at commercial energy broker and utilities consultancy Advantage Utilities have revealed exactly what factors businesses should be monitoring and considering to help mitigate soaring energy costs during the uncertain months ahead. Events last year including an unusually cold winter in Asia, low winds in Northern Europe, hurricane season in the US and an interconnector fire in Kent had a huge impact on the UK’s gas storage and energy supply. According to the National Grid, the blaze alone will reduce capacity by about 50% until March 2022. These interconnected events caused concern, confusion and uncertainty for many businesses over what could happen to their energy costs. Within their newest report, Advantage Utilities identifies the Russia/Ukraine conflict, EU and UK gas storage level and carbon as bullish factors for 2022, with U.S. LNG production, current mild weather and Nordstream2 commissioning as bearish. Europe relies on Russia for around 35% of its natural gas requirements, therefore the conflict between Russia and Ukraine could be cause for concern in the year ahead.
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Commenting on the report, Andrew Grover, chief executive at Advantage Utilities said: “Escalating tensions give rise to fears that Russia could effectively ‘weaponise’ gas by restricting supplies to Western Europe in the event that threats to impose economic sanctions are carried out in response to any Russian invasion of Ukraine. Russia has been known to politicise gas supplies in the past.”
He continued: “Whilst the UK hardly imports any Russian gas, we are certainly not immune to wholesale market increases, and should this course of action unfold, the likely impact would be a surge in LNG prices as well as a potential spike in crude oil.” “However, it is interesting to note that the U.S. is expected to become the largest LNG gas exporter by the end of 2022, and should the present trajectory of supply volume continue, they could become a major contributor to European supplies,” said Mr Grover.
Surviving soaring costs Whilst the market continues to be
precariously volatile, there are an array of procurement options for businesses which can be used to lessen the brunt, ranging
from traditional fixed-term contracts, through to ‘blend and extend’ agreements, quarterly purchasing and variations of flexible procurement strategies. Mr Grover points out that the suitability of each approach will be dependent on a number of factors, including an organisation’s energy profile, appetite for risk and the importance of budgetary certainty.
“Regardless of procurement strategy, higher wholesale and corresponding grid prices also mean that the financial incentive for on-site generation is greater than ever, with the likes of solar and wind solutions having the additional benefit of reducing an organisation’s carbon footprint. With various funding options available, it may be realistic to implement a solution which drives savings without any capital outlay or ongoing risk,” he says.
In 2022, ESOS III (Energy Savings Opportunity Scheme) audits are mandatory for qualifying organisations. For Mr Grover, this only escalates the importance of conducting a full energy audit, with the aim of driving improvements in efficiency, engaging with staff and ultimately reducing overall energy spend and being as sustainable
Record numbers of GSHPs manufactured in the UK
K
ensa Heat Pumps, the low carbon ground source heat pumps (GSHP)
specialist, has broken production records
recently, doubling its output over the past 18 months and working towards a further twofold increase in capacity by 2023.
Heat pumps are recognised as vitally important in helping the UK achieve its net carbon zero target, with the
Government aiming for 600,000 of them to be installed a year by 2028 – a significant increase in current market volumes.
Every GSHP installed is the equivalent of taking a combustion engine car off the road. To date over 1 million tonnes of carbon will be saved as a result of Kensa’s GSHP installations across social housing, new build developments, private retrofit homes, and businesses in the UK. Kensa Group chief executive, Simon Lomax, said: “Kensa has passionately advocated for a long time that GSHPs are best placed to deliver low carbon heat to the UK. There is a particularly welcome focus from Government in ensuring a large proportion are manufactured here to boost our green economy.
“In response, we are committed to scaling up production to meet increased demand and fulfil the Government’s ambition to ‘build back greener’. Our mission is to connect thousands more people in homes and businesses across the country to cleaner, greener, affordable heat.”
He continued: “Our teams have been working hard to deliver fantastic outcomes over the last few months. In the midst of the challenges of a stretched global supply chain, a labour shortage, and significantly increased volumes, Kensa celebrated the highest monthly turnover ever and continues to break records in UK heat pump production.”
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