Energy brokers have warned of spikier half hourly power prices in 2016.
The consensus is that wholesale prices will remain flat. However, changes to industry balancing processes, tight system margins and increasing non-commodity costs, such as transmission and distribution and green energy subsidies, will drive up power prices.
Brokers predict spikier half-hourly power prices will put pressure on heavy energy users to better manage within-day consumption, or pay a premium for suppliers to manage risk on their behalf.
Such firms will likely benefit from flexible energy contracts, says Jon Ferris, head of energy markets at Utilitywise, while avoid paying a premium for fixing non-commodity costs too far in advance. They should also consider demand-side response.
Energy buyers and managers should “recognise that there is much more volatility in short term pricing… and if you can shift your consumption the rewards are increasing”, said Ferris. “If you can’t, the costs of not doing so are going to grow.”
Read more from Ferris, along with views from Inenco’s Matt Osborne and Noveus Energy boss Bobby Collinson in the latest print issue of Mission Critical Power, out this week. Sister title to The Energyst, the magazine is free to qualifying individuals. Click here to subscribe.