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September may prove to be a crucial month in the fight against rising fuel costs as governments across Europe took slightly different measures in combating increasing gas and electricity prices.


The German government paid over €8bn to take control and clear the debts of Uniper. This is seen as a strategic purchase which should ensure that Germany has an increasing degree of control over their gas supply, with hopes that this move — combined with newly introduced measures to cut consumption — will be enough to halt Germany’s dependence on Russian gas imports.


Nord stream has seen a new influx of problems with pipeline eruptions causing one of the largest gas leaks ever recorded. Even though Nord stream 1 was no longer actively delivering gas to Europe, the market reacted defensively and European gas prices rose by 12% — with the UK benchmark increasing by 6%. This shows that the market is still highly sensitive to negative news even when it doesn’t have an immediate impact on the volume of gas currently being supplied.


The UK government responded to the growing crisis by introducing price caps for both residential and commercial users. By funding this with a windfall tax on oil and gas companies it seems that these companies will be less likely to lower prices going forward as they look to recoup their profits, and it could be an expensive venture for the government to subsidise energy prices for anything more than the next few months.

Outlook

While most European nations are now at, or near to, their capacity for gas storage, it still seems like many will be hoping for a mild winter to be able to avoid potential fuel shortages. We can expect to see more nations follow Germany’s lead of bringing in measures to curb consumption. So far Germany has banned shops and commercial premise from keeping their doors open, banning the use of electric signs after 10pm, and capping the temperature that offices and public buildings can be heated to at 19C. There is also an increasing risk that suppliers and utilities may not have the liquidity to cover their hedge positions. Market operators will often have short positions, effectively betting against the prices going up, this acts as a hedge and in theory should ensure profit at all times. However, when prices quickly spike this has an immediate impact on the short positions, but the profits from the increased price may not be realised for months or years, putting the operator in a difficult position. It remains to be seen how severe this problem is but we will likely see more governmental support, intervention, or purchases to help address this problem and to stop it from putting further pressure on the market.

How Can ESEV Help?

With increased energy rates continuing to have a significant impact on how businesses approach their energy consumption and purchasing, it’s never been more important for businesses to understand the exact impact of the market on their budgets, both in the short, medium and long term.

At Experienced Solar, we monitor the market daily for all our clients and with a clearly defined strategy, we feel there are ways to mitigate risks without having to fully commit too far into the future. We’re also helping multiple organisations consider self-generation to help improve their potential to become self-sufficient, and less reliant on variables outside of their control.

To understand more on how we could support your business with a more sophisticated purchasing strategy or solutions-based conversations, please contact our team on 0121 274 3573.