If the success of your business relies on access to high amounts of energy, you’re likely to have experienced the ongoing rollercoaster of electricity costs. High Energy Users (HEU), especially those in the manufacturing industries, continue to remain tied to the discretion of power providers, confusing energy bills and increasingly volatile pricing. What can we expect the future of energy prices to look like? Let’s look at the influencing factors that all HEU businesses should know about, beyond COVID-19.
The Government’s lack of influence
The price of commercial electricity has risen by an eye-watering 200% of the wholesale cost in the past four years ($107/mWh in August 2019 from $34/mWh in 2015). While current demand during the coronavirus crisis has seen a short term drop to the wholesale price of energy ($57/mWh versus that $107mWh in August 19), this is unlikely to continue when industries return back to normal.
Unfortunately for many, the Australian government openly admits to having an extremely low amount of influence over the price of energy, in this time of crisis and beyond.
With a revolving door of Prime Ministers over 10 years, the stability of the industry has been consistently overshadowed by party politics and policy paralysis.
Despite popular belief, the federal and state Governments have underlined their hands-off stance, stating that their key role instead is “(in) coordinating and incentivising action by state and territory governments”. For South Australia and Victoria, this lack of influence is complicated further by a lack of regulation altogether by governmental bodies.
The Ongoing Closure of Archaic Coal
With the closure of Hazelwood, one of Victoria’s largest coal-based power plants, Victoria lost 20% of their power supply. Alarming, yes, but even more so when the Victorian government projects a net population increase of 3.2 million people by 2056, and no clear pathway forward being established by the government.
30 months on from the closure, the public is yet to learn about how supply will be increased to meet demand, while looking down the barrel of further coal plant closures, like Yallourn (closing 2029) and Loy Yang A (2050) and Loy Yang B (2047, potentially 2035).
These ageing power plants not only stem back to the issue with Government indecisiveness, but also highlight why we should not be surprised to see prices continue on their volatile and unpredictable surges and falls.
The National Energy Guarantee
The National Energy Guarantee (NEG) fell prey to the Liberal Party’s leadership eruption in 2018, but imposed two obligations on energy retailers: An obligation to supply sufficient quantities of ‘reliable’ power to the market, and an obligation to reduce emissions over the decade between 2020 and 2030.
Having fallen apart due to ongoing political snafus, including now PM Scott Morrison removing his support of the guarantee due to a ‘misrepresentation’ from Labour, Australians remain back to square one in regards to seeing a solution to the energy price and emission crisis.
With the focus of energy waysided by the public health crisis, we can expect not much traction from the NEG or related initiatives in the near future, leaving Australia again in a freefall when it comes to getting a handle on volatile energy pricing.
Taking control of your energy bills
If energy usage is key to your business operations, do not despair. There are proven beneficial options available for you to regain control and reduce the size of your power bills, which becomes even more so important during these unprecedented times.
So, what can you do today to reduce your energy costs?
Investing in environmentally and economically sustainable solar power
We recently went into detail about how solar acts as a benefit to your brand value as well as your bottom line. Unlike many other solar providers, we are financially accountable for the power produced by your system, so we own the risk. It is just the start of the partnerships we build with our customers as we continue to strive to identify further savings for you as part of our energy procurement services. With the Instant Asset Write Off changes, solar for your business is now more affordable than ever.
Empowering yourself with a better deal through experienced brokers
Not many businesses are aware of their opportunity to negotiate the terms of their bills, even if they are still in a locked contract. Our team of Energy Management specialists provide services across procurement, group tenders, energy comparisons and meter monitoring. Energy comparison alone has made a dramatic difference in the needs of our clients, and for some the combination of solar and a new energy deal has resulted in a huge difference in their overall spend.
Start the conversation about a more predictable future
For a free solar feasibility assessment, or just to start the no-obligation conversation about your High Energy Usage and bill concerns, reach out to the team today via our contact form, or directly on 1300.304.448.