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Coping with energy price rises (and how to avoid passing them on to your customers)

We are all very aware that energy prices are rising. Whether we’re talking domestic or commercial; rates are all on the up due to the plummet in supply of natural gas.

So what’s affected the supply of natural gas? Let’s have a look (in a nutshell)

Geopolitical conflicts, particularly the invasion of Ukraine, have significantly impacted natural gas supply due to blockades, the halt of Ukrainian production and the imposition of sanctions/ indirect sanctions on Russian gas. There has also been ongoing “maintenance” on the Russian to Europe Nord Stream 1 pipeline leaving channel capacity at just 20%, and delays on the build of the Nord Stream 2 pipeline

In addition, Europe also suffered a colder-than-average winter in 2020-21 leading to gas shortages and a depleted stockpile of natural gas, in conjunction with an increase in demand for natural gas from Asia which has directly impacted European shipments.

As lockdown has eased around the world there has been a huge surge in demand for natural gas as businesses, retailers and leisure facilities open their doors and customers make the most of “getting back to normal”.

Along with these global factors, there have been some UK-specific contributing factors that have affected supply and pushed prices up. In 2021 a fire at a National Grid site in Kent destroyed a cable used to import electricity from France to the UK, shutting down that supply chain.

There have also been outages at nuclear power stations meaning electricity is being generated by gas rather than nuclear power. Wind power has also been down due to low winds, and therefore also putting pressure on the gas reserves.

And, finally, speaking of reserves - in the UK we have a very low stockpile of natural gas - just 2% of annual demand (compared to around 25% in other countries).

The current status of commercial rates

Commercial rates for businesses that are out of contract have risen by an average of 100% since August 2021. There are also no price caps on commercial contracts, meaning that suppliers can hike their prices to businesses who have let their existing fixed rate contracts expire (and failed to renew) as much as they need to in order to cover their increased costs in purchasing wholesale gas.

But regardless - fixed rates are on the up too. In March, British Steel was forced to increase the price of of each new order by £250 / tonne to offset the increase in energy costs.

What can businesses do in order to keep their energy bills as low as possible?

Obviously there are the long-term changes that most businesses are working towards from an environmental and financial point of view, such as investing in smarter machinery/ systems to replace old inefficient ones, using renewable raw materials and energy as much as possible are at the heart of many long term decarbonisation plans.

In April of this year, the government launched it’s Energy Security Strategy which mainly reiterated this long-term focus on investing in smarter and more sustainable systems and energy suppliers, along with how to reform their overall processes. Big changes that potentially will take a long time to put into place.

But there is another way that offers more simple fixes without the cost or change in infrastructure. As Jodie Eaton, CEO of Shell Energy UK states:

“What’s needed is a top-down focus on corporate energy efficiency that goes beyond procurement and instead involves all aspects of operations. Done well and with tight ongoing management, it can mitigate the impact of energy price rises and support decarbonisation goals, while establishing a foundation for a transition to renewables.”

So, how?

1. Simply reduce the amount of energy used as much as possible.

Switch machinery off when not in use, monitor overall energy use and audit where savings could be made, turn lights and heating off when not required, fit light sensors, don’t heat areas that don’t need it, go paperless, educate and encourage staff, seal facilities from draughts etc.

2. Ensure you lock-in your existing energy rates to fixed contracts!

3. Switch to Bio-Circle to reduce energy consumption across all your surface technology requirements

Throughout the day you will probably need to do some or all of these jobs:

  • clean and degrease components

  • wash down machinery

  • prepare surfaces for painting, varnishing or further processing

  • clean equipment

  • clean paint or varnishing tools

  • descale internal pipework in heat exchangers, moulding tools & other closed loop systems

  • refurbish equipment, components & machinery

All these are fairly simple processes. But just making little tweaks to how these processes are carried out can have a huge impact on saving energy, time and money. Choosing to use Bio-Circle surface technology systems and liquids for these mundane but essential tasks can save a huge amount of energy that your facility uses.

How is Bio-Circle more energy-efficient than other surface technology systems? Our cleaners take what nature does naturally and speed it up. Our liquids are made from renewable raw materials, use catalytic processing to breakdown contaminants (rather than just separating them out as with solvent-based cleaners) and digest fat, oil and grease at low temperatures. Even heavy soiling can be removed at room temperature. The low-temperature cleaners have also been developed for mechanical and manual use so can be used in a variety of applications.

Our cleaning systems use advanced filtration to clean the cleaning liquids so they are recyclable and can be used again and again. Our systems also gauge the volume of the parts to be cleaned, ensuring the consumption of fresh water is targeted to only what’s required and the risk of drying on the parts is reduced.

With efficient systems and non-hazardous products, we optimise our customers' processes.

There is no need for hazardous materials storage, specialist cleaning zones (with additional energy-rinsing ventilation), training or the creation of operating instructions - all of which can contribute to energy usage.

All these simple, small changes accumulate into making a vast impact on energy use. Over time, they could even contribute to the long term goals of investing in more efficient & smart systems and machinery by releasing cash that would have otherwise been spent on paying those energy bills!

So, before we succumb to the price rises and presume that revolutionising our processes is only ever going to be an expensive option for the future, there is an opportunity to make small adjustments in the first instance in order to protect our individual corners of the market and without passing price rises on to our customers.

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