Why is Energy Expensive?


Whether for our businesses or our homes, we all want a good energy deal. One that not only supplies cost effective energy but also with a company with a proven track record and good customer service.

“So what factors should we take into consideration when looking at switching suppliers?”

Since Prime Minister Theresa May pledged to cap prices, all of Britain’s top energy suppliers increased their prices. Wholesale gas prices spiked to their highest level in at least 10 years, thanks to the ‘Beast from the East’, while the heatwave had the opposite effect and led to higher than demand electricity.

Weather plays a major part in the way we consume gas and electricity, our consumption for gas peaks during the winter months whilst when we do have spells of a heatwave, our need to cool down by means of air conditioners and fans puts pressure on suppliers to generate more and keep up with the demand hence price hikes.

“What key factors are contributing to the increase of wholesale energy?”

We’re more reliant on gas imports from liquefied natural gas (LNG) ships and imports from Europe whereas previously we used our own storage facility to inject gas in the summer for us to use in winter which reduced our need for imported demand.

Brexit has also impacted prices, with a weak pound against the Euro, Europe has a greater advantage to import energy from the UK which puts more pressure on supply and demand and increases prices in the UK.

“What about renewable energy?”

Whilst renewable energy is cheap to operate it can be expensive to build and facilitate a functioning plant, location is also a factor to consider (for example special consideration is given to areas where wind can be generated constantly). Choosing the right location helps to maximise the amount of energy we produce. It has taken some time but governments are slowly starting to implement more policies in favour of greener energy with increased growth in renewables, take a look at the renewables obligation as an example of one such policy.

“So what is the cost of going green?”

Green energy tariffs are designed to promote renewable sources, but as we have established, green energy isn’t cheap to run and green tariffs will naturally cost more, however it doesn’t mean to say that there isn’t a good deal out there and we should pay particular attention to when wholesale renewable costs drop because naturally so will the price of green energy tariffs.

“How do I interpret my tariff?”

To the trained eye, checking tariffs is a simple process but for those who are less inclined to look over the small print, it can be a daunting task, especially if you are considering switching supplies or looking to make changes to your current supply. It can be even more of a time constraint if you have multiple premises supplied on different tariffs. A reputable energy broker can provide you with impartial advice and seek better and alternative suppliers for you.

Always consult an expert before you make any decisions about your energy supply. UK Energy Manager has helped businesses across many different sectors secure better energy tariffs and provided them with advice on how to make savings on their bills by making incremental changes to the way they use energy.