LATEST MARKET UPDATE: Gas and Power prices are largely trading at parity with last week’s levels, despite some significant price swings at the front of the pricing curve. The bout of low pressure has seen reduced wind output, increasing demand for gas-fired power generation and stretching a European gas system which is struggling to attract global LNG. Winter prices have also been volatile with concerns over gas storage levels being partially offset by positive supply news surrounding the potential completion of the Nordstream 2 gas pipeline. Prices further out have been softer, as renewed coronavirus fears in the wake of the delta variant have weigh on global oil markets.
We can now see a future in the UK where almost all our electricity comes from renewable energy sources like wind, tidal, biomass, hydro, and solar. Renewable energy sources account for 26% of the world’s electricity but are expected to reach 30% by 2024. The pandemic put a pause on businesses reviewing their energy contracts, as many weren’t sure where they would be after the pandemic, but as the world slowly begins to return to normality, this should increase.
Renewable energy now
We are beginning to see the end of brown energy, which is energy from traditional resources, such as coal, oil, natural gas, and nuclear power, as the world becomes more aware of the negative impacts on the environment. In 2020, renewable energy accounted for 47% of the UK’s energy sources, beating the government’s target of 30%. This target has been beaten with the help of everyone’s efforts in achieving net zero, net zero has encouraged organisations to look into their consumption and identify ways they can reduce this to meet net zero targets.
As renewable energy becomes more popular, the premium associated with buying renewable energy has increased slightly over the past few months, currently carrying an uplift of c.0.3p/kWh against the cost of regular brown energy. This has been underpinned by a surge in the price of REGOs (Renewable energy Guaranteed Origin), the certificates that are used to show the provenance of the renewable electricity provided within a supply contract. REGO costs have been pushed higher by several factors, including higher levels of demand for renewable electricity, lower levels of renewable generation over the last 12-months and higher wholesale costs.
Businesses have access to additionality, which is where a business’s power purchase agreement directly adds renewable energy to the grid and results in emission reductions for the business as they are contributing to increasing renewable energy generation. This is beneficial for businesses as they are giving back to the environment, this can bring you both financial and competitive advantages as you are contributing to benefitting to your community.
The future of renewable energy
By 2040, it is predicted that 72% of coal-based power will become globally unprofitable as wind and solar become the cheapest sources of electricity. Solar and wind power are expected to take over the market, a smaller percentage will come from tidal, hydro, and geothermal.
With net zero targets being put in place in the UK, this has sped up the need for businesses to switch to renewable energy. Many businesses are looking at their suppliers’ green energy options to determine easy, simple ways they can begin to make a difference. The UK has committed to having coal power removed by 2023-2025. Since COP 26, countries such as Poland, Vietnam and Chile have also agreed to similar commitments.
In the past, the UK energy grid relied on a small number of power stations. Recently our electricity system has become more diverse, meaning there is far less threat to energy security in the future. More businesses will move from brown to green as more companies focus on reducing their carbon footprint. Switching to renewable energy helps your business reduce its carbon footprint whilst demonstrating to your customers your environmental credentials.
The UK Government announced back in 2020, that they are investing in renewable energy innovation to bring the cost of technologies down, so this is available to businesses with less revenue. The BEIS (Business, Energy and Industrial Strategy) is expected to invest around £15 million in renewables innovation theme, according to Government website.
How we can help
At Utility Team, we understand the commercial and environmental benefits of switching to renewable energy; when requesting energy contracts, we automatically apply for a green contract so your business can see the benefits of going green.
At the beginning of 2021, we set a goal to have 15% of new electricity customers on renewable contracts; 10 months in, and we have smashed this target, we now have 83%* of our customers on renewable electricity contract, this is something we’re extremely proud of, and we want to keep going until we reach 100%.
We have a team of experts waiting to analyse your energy usage to find the best renewable energy deal for your organisation and support you with your compliance and energy procurements. For more information, please get in touch, call us on 02476 997901, or email email@example.com
*This figure is based on all renewable electricity contracts signed since January 2021.