Managing energy volume requirements during Covid-19 crisis

Posted on 29 April 2020

As lockdown and social distancing measures cause energy demand to fall dramatically among the industrial and commercial sectors, many businesses are now having to take action to manage reduced energy requirements.

“For any customer with changes to their forecast power or gas volumes, the key is to keep us informed,” says Ben Spry, Head of Flexibility Services at npower Business Solutions. “Depending on the nature of the customer’s portfolio and purchasing strategy, this may require a quick update call with your primary account contact every few weeks – for example if you’re on a fixed-price contract. And for those on more complicated flexible purchasing contracts, more frequent dialogue with your Client Portfolio Manager is highly recommended.”

For the team of energy market experts on nBS’s Optimisation Desk, working hours and accessibility are still the same as pre-lockdown, albeit with staff now based at home. “We’re as busy as ever and speaking to many of our customers on a daily basis,” says Lee Tucker, Client Portfolio Manager.

“As you’d expect, most of our customers are looking to reduce volume requirements. But some sectors – for example supermarkets and certain food retailers – have not been effected to the same degree,” continues Lee.

The overall fall in global energy demand is seeing power and gas prices at record lows. For example, the summer 20 contract was trading below £30/MWh ahead of delivery, due to the Covid-19 crisis.

“However, last week, we started to see an uplift in the carbon market, as traders appear to be anticipating the Eurozone economy will start to lift restrictions shortly,” says Lee “Plus the announcement from EDF of an approximate 25% reduction in French nuclear output to 300TWh for the remainder of 2020 has also provided some upside.”

Two key actions

For any large energy consumer looking for advice on how best to deal with this crisis, Ben and Lee recommend:

  1. Work with your partners to understand the impact of the current situation on your business energy. For most companies, this will mean either reducing what you thought you were going to have to buy, or selling back volume you are now not going to use, where this is possible. For nBS customers, you can notifiy us of any change in volume via Contract.Volume.Optimisation@npower.com.

  2. Use this time to take stock and look at the wider and longer-term implications for your business going forward, then explore with your partners how you could potentially increase resilience. For example, could you rely better on onsite generation or battery storage to provide some protection from market variables? Is there any way you could adapt your energy consumption to be more flexible? How might you revise your purchasing strategy to reduce future exposure?

“Unsurprisingly, many of our customers are currently experiencing some difficulties,” says Ben. “But the markets are pretty bearish now, so there is the potential to seize opportunities for greater value in future seasons – although doing so clearly has to match your business’s longer-term risk management strategy.”

For help and advice to determine the best approach for your business, talk to your nBS Client Lead or Client Portfolio Manager (for existing customers). Or email the team of experts at Energy HQ via nBS@npower.com.

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