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The role of energy management in today’s volatile market

Energy Action

“I am excited to have joined Energy Action, in large part because we are here for our clients, we help them understand and take control of their energy requirements at a time of unprecedented market volatility,” Slavich says.

 

“My vision is to continue to combine the deep expertise and capability of our people with ongoing enhancements to our technology and digital platforms to deliver energy management solutions that can make a tangible difference to businesses growth considerations in the current environment. We will also have a particular focus on improving our customer service with a view towards growing the business to help more and more businesses and government agencies.”

 

The pricing environment

Energy Lifecycle Diagram

(click image to enlarge) 

Slavich explains that the energy market today is experiencing a unique convergence, where both electricity and gas prices have risen to levels that have the potential to impact the profitability and risk profile of energy intensive businesses.

“We have seen peak electricity prices jump from 5 to 6 cents per kilowatt-hour to 26 cents in South Australia, and 18 cents in New South Wales, Queensland, Australian Capital Territory and Victoria. Similarly, non-peak prices have risen from 3 cents to more than 12 cents. At the same time, gas prices are at 20 cents a gigajoule today, up from 3 to 6 cents. These are substantial price increases that are putting real pressure on commercial energy users,” Slavich says.

“For electricity, this is being driven by a supply-demand imbalance. Hazelwood’s sudden plant closure, a 1600 MW plant that represented 5 per cent of national electricity supply, has constrained available electricity supply. In the gas market, producers have been pursuing better pricing in offshore markets leading to a domestic supply shortfall, together with gas being in demand as an electricity producer has pushed gas prices sharply higher.”

 

Reducing energy usage

According to Slavich, the best way to counter increased prices is to lower your energy usage. To do this effectively, businesses should first conduct an energy audit.

“An energy audit is where we typically start to better understand how a business can reduce consumption levels and this could lead to simple measures to manage demand such as installing more efficient machinery, lighting improvements, or adjustments to heating and cooling systems.”

 

Energy procurement

Slavich explains that Energy Action’s platform helps to optimise energy procurement, and how working with the retailers to secure the best energy pricing outcomes can offer substantial benefits.

“A key focus for Energy Action is to help our customers engage with the retailers to negotiate the best pricing and contract outcomes. From assisting with the tender process, leveraging our reverse auction platform or structuring larger energy deals, we are using our people and technology to create better outcomes for our clients.”

Four markets

 

Contract management

Slavich says that a vital part of managing energy costs is to have greater visibility at all stages of the cycle – from a more precise view of ongoing energy usage levels through to ensuring clients are receiving accurate bills.

“Energy Action continues to invest in the latest technology to help businesses monitor and manage energy usage. Ongoing enhancements to our Energy Metrics platform remain a focus, most recently launching the mobile app allowing for daily tracking of usage, spend and carbon emissions.”

“Ensuring the correct billing information, and verifying network tariff levels, also has the potential to save businesses substantial costs. We see a large number of inaccurate bills, and have the capability to swiftly identify and remedy these discrepancies.”

 

Becoming more self-sufficient

The use of ‘behind the meter’ strategies to create sustainable energy usage and manage costs is a growing option for Australian commercial users according to Slavich, and one that is reflective of the technical expertise within the Energy Action business.

“Another key focus for us is helping suitable clients to become self-sufficient energy users, and this is where solar energy comes to the fore. Through the installation of embedded networks and microgrids leveraging renewable technologies users can support their own energy generation and consumption over the long term. There are now approximately 2,700 recognised embedded networks Australia-wide, and we expect to see this continue to grow.”

“Embedded networks are a great option for businesses who have good rooftop area and tenants who occupy their buildings allowing them to on-sell electricity to their tenants. Even with no tenants, solar is a great option to supply your own electricity with payback periods dropping significantly with high electricity prices. We are typically seeing a four year payback period, which makes solar a great investment.”