Listen back to the full webinar to hear more from Alan and Ben, by clicking here.
Current market conditions for high-energy users are tough. Competing factors continue to mount pressure on already stretched resources which has left industry navigating how to remain competitive while staying committed to sustainability goals.
This challenge was examined in greater detail by Aggreko and Cornwall Insight during The Energyst’s recent webinar. Called ‘The New Normal of Energy’, the discussion focused on findings from Aggreko’s latest pan-European C-Suite report and showcased how flexible energy solutions can help to rebalance competing priorities for Europe’s high energy users.
Alan Dunne, Managing Director at Aggreko, led the discussion while Ben Hall, Chief Strategy Officer, from Cornwall Insight provided an overview of the wholesale market in the intervening months since Aggreko’s research was published.
The importance of research
Alan began by discussing how current market conditions are making it harder for companies to plan with certainty. To help its customers, Aggreko conducts regular market research to better understand the sectors it operates in and to identify challenges that guide effective product development and investment. It’s also why the latest report, Rebalancing the Energy Transition, specifically targets C-suite perspectives. Understanding this demographic is key to matching solutions offered by Aggreko, aligning strategic priorities and driving growth.
Sustainability was a central feature of the research – particularly how views have shifted with the onset of market volatility. During the webinar, Alan explained how sustainability is still central to procurement decisions, but recent market volatility has shifted priorities back to core operations. Aggreko set out to confirm whether this shift was real or just assumed, which the research provided clear answers to.
Alan Dunne: “This project was about uncovering the true state of play and identifying synergies and differences. If you want to develop the most effective energy solution, you need to fully align with the views of those in charge of strategy, objectives and budgets.”
Shifting net zero timelines
One of the most striking findings from the report was the shift in net zero timelines. Results found:
- 50% of respondents said they had delayed their net zero targets
- 37% adjusted short-term goals but remained on track overall
- Only 9% accelerated their plans, and just 4% reported no change
A balancing act
Alongside a shift in sustainability timelines, Alan also spotlighted figures from the report which show an overall increase in appetite from CEOs to invest in the energy transition and at the same time, a desire to reduce costs to drive profitability. This, Alan explained, is why Aggreko is focusing on four key areas to help customers through today’s market. These are affordability, security, reliability and sustainability.
Alan Dunne: “…for us – the focus now has to be on reducing costs and driving profitability. And by improving efficiency, you naturally reduce operational costs, lower consumption and therefore emissions.”
Wholesale movement
Ben Hall from Cornwall Insight provided an overview into what’s currently creating movements in the wholesale market. He presented findings which suggest power prices are going to remain relatively stable, but significantly elevated, approximately 40-50% above historical norms. However, Ben highlighted the stark statistic that businesses in the UK pay the highest for their electricity across the whole of Europe. This ties into one of the four key pillars Aggreko is focusing on – affordability – and highlights the need for solutions which fit stretched budgets while providing maximum efficiency.
Policy and intervention
Beyond what Aggreko is doing to alleviate the pressures on businesses by providing energy solutions designed for today’s market, Ben also spoke about what government is doing to help through the introduction of various policies and interventions. One of these examples was the UK government’s recent plans to broaden the exemptions from low carbon levies as part of its wider industrial competitive plan. While the largest users of electricity already have some exemptions under the energy intensive industry scheme, this latest expansion takes that relief down to the next tier of significant energy users.
Ben Hall: “Based on our assessments, this (low carbon levy exemptions) could cut power costs by up to 25% for eligible users.”
Reasons for shifts
Ben went on to explain the reasons for shifts in the wholesale market price of energy and gas. He spotlighted how the UK is a major importer of gas, often in the form of LNG, and therefore is directly impacted by movements in international natural gas and LNG prices. There’s also been a lot of competition for LNG cargoes, especially from Asia, which has led to prices remaining high in comparison to historical norms. This volatility in wholesale price of energy reaffirms Aggreko’s decision to prioritise secure and reliable temporary power solutions for industries where any downtime is perilous.
Listen back to the full webinar to hear more from Alan and Ben, by clicking here.
