Times are tough for businesses across the globe, with many still reeling from recent energy cost increases.

Concerns continue to rise with the prospect of a further decline of Russian gas flowing into Europe.

Natural gas has now soared 700% driven by the war in Ukraine with prices in Europe and Asia which rose more than 60% in the weeks since Freeport LNG Texas terminal was forced to temporarily shut down last month.

Nowdays energy prices fluctuate enormously. In the past, prices for gas and electricity were a relatively constant factor but today, the price charts are more like a roller coaster, which does not make it any easier for those who are responsible for purchasing energy for their business.

The energy market is so unpredictable: prices for gas and electricity have a strong correlation. They are linked to each other because much of our electricity is produced with gas-fired power stations. The winter of 2021 was relatively cold, which means that many gas reserves have been used up. Furthermore, in 2021 there was little wind to generate green electricity.

In addition, gas prices in Asia have risen, pushing up prices worldwide. And now there is also the war in Ukraine, which means that alternatives have to be found to replace Russian gas.

“Where possible, we try to offer our customers certainty with a fixed price.

Of course, we also have to take purchasing risks into account.”

David A. - Trading analyst at Bramo Energy

Hedging price risks

As we are independent consultants, we want to offer our customers clarity about all of the prices involved in purchasing energy. But how do you do that if prices fluctuate so quickly?

We do it by hedging the risks (whether it is a Fixed or a Flexible energy product) and advising our customers on the best time to purchase or running one or more tenders with different suppliers to increase competition.

The increase in green energy

All energy prices are linked. This also explains why even the price of green energy simply moves with the market. It doesn't matter where the power comes from, what matters is how much is available. For example, on April 23rd of this year in the Netherlands the price of electricity suddenly became negative. The electricity generated by wind and solar exceeded the demand. Due to the increasing supply of green energy, we see more often that electricity is cheaper during traditional peak hours than during off-peak hours. This shows how complicated it has become to buy energy.

"In the long run, we think that renewable energy will lower the price."

Will the increasing supply of green energy lower the prices of all energy? The price is more likely to rise, because renewable energy increases uncertainty.

If an energy supplier needs to have a contract with a vendor of solar energy production and they promise a fixed price, they have to invest money as they don't know when the sun will shine next year for example, however there is good news in the longer term. as technology is improving day by day with better energy storages and batteries.

Would you like to know more?

Or do you have any questions about one or more of these topics?

Feel free to contact us at hello@bramoenergy.com.