Unique Consumer Climate Provides Opportunity to Exploit Falling ENERGY Prices
As we move into the closing quarter of 2020, the energy sector has seen an unprecedented consumer climate this year, one befitting of such unique societal circumstance.
Following the expected downward trend seen during the winter of 2019, the opening months of 2020 saw energy prices fall further through the opening quarter due to lower demand, as the UK experienced temperatures slightly above the seasonal norm.
Q2 saw further downward price movements, especially in the gas market, where an average fall of 4.4% was seen in comparison to the same period in 2019. Positives were seen in the power market across this quarter also, as consumers in the higher energy-usage brackets saw their prices fall.
This is not uncommon in spring, as temperatures begin to rise following the winter months, naturally reducing demand. For us, this signals an opportunity to renew or renegotiate energy supply contracts, as the consumer is in a stronger position given the lower energy costs that occur within these periods of lower demand.
This fall in price across short-term and long-term contracts was indeed a positive sign for consumers this spring also, who found themselves with the opportunity to use these dips in the market to secure reductions in their rates as part of contract negotiations falling in the early summer period, as gas prices fell to a four-year low and seasonal power prices found themselves lower than at the equivalent time last year.
In the second half of the year, however, both power and gas prices saw sharp increases, with a 19-month high in short-term power contract rates, as domestic industry returned to operation. Relatively low prices seen during periods of inactivity earlier in the year were inversely impacted by a surge in demand as businesses sought to mitigate the adverse effects of extended closures with the implementation of work from home schemes, alongside a reopening of industrial premises.
Moving into the final quarter of 2020, stabilising prices and demand have put the market on track to follow a similar profile to last winter, despite the detrimental effects of COVID-19 on the market.
Consumers should follow the market closely for upcoming renewals and planned negotiations, as, although the markets have reached a level more representative of typical winter movement, factors such as volatility in the carbon market, ample liquefied natural gas (LNG) supply from continental Europe, and further lockdown measures could result in prices falling once more, providing opportunity for consumers to benefit from any drops in the markets.
We are currently working with a wide range of high energy user clients, advising them on how to reduce their energy bills and negotiating energy contracts on their behalf to ensure they’re benefitting from positive changes in prices and achieving the most competitive price in the market.
For more information about the Carter Jonas energy brokerage service, contact Jake Copsey at email@example.com.