A volatile energy market requires large businesses and organisations to rethink their energy strategy and take a longer-term view. Do it now, advises Mike Chessum, sales director, Industrial & Commercial Energy and Services at British Gas Business.
As a former energy manager, with more than 20 years’ experience in the sector, Mike Chessum understands the challenges of persuading the board to take a long-term view on energy. But the lines are blurring between energy procurement, management and flexibility. As prices become more volatile, that creates an opportunity both to cut cost and to generate revenue.
Maximising those opportunities, he says, requires a more sophisticated approach to procurement. Focus less on 1-2% price efficiencies, advises Chessum, and instead unlock double-digit savings by recognising that procurement, energy efficiency and flexibility are now intrinsically linked.
In that regard, organisations that employ energy managers will find them increasingly valuable over the next few years, Chessum believes. Even those without dedicated resource can manage consumption via a plethora of user-friendly apps and software, and by harnessing the expertise available from service-focused suppliers.
But devising a robust, longer-term and agile energy strategy is now paramount.
“Many mid-sized companies don’t take a long-term view on energy. They move from year to year almost on a burning platform, depending on the level of volatility in the market,” says Chessum.
“But now more than ever, they need to take a strategic look at the opportunities and risks, because so many things are changing,” he says. “With the changes in the UK energy generation mix, prices have become more volatile and non-commodity costs continue to rise.”
“By taking that strategic review and mapping out the influences on their business, companies will be in a much stronger place to manage incoming change,” he adds.
Non-commodity costs, such as network charges and policy costs, now make up more than half of the power bill. That may be well known, says Chessum, but avoidance strategies take time to action. The same applies to generating revenue from assets by selling flexibility back to various markets.
“Assets are an under-utilised resource,” says Chessum. “Start now and it may be possible to bring some online by this winter. But, for sure,” he warns, “If you don’t connect assets over the next five years, as the market becomes more flexible, you will be left behind.”
Even with network charges such as Triad under review, Chessum thinks those with connected assets will gain financially, regardless of how the revenue is allocated.
“Act now and you will be in a position to rapidly adapt your strategy to stay ahead of the competition.”
To find out how British Gas Business can help save you money through your energy procurement strategy, data insights or operational flexibility, call us on: 0845 070 3720. For further information on managing your business’ energy more generally, visit www.britishgas.co.uk/business
This is a sponsored article created by The Energyst in partnership with Centrica.