Energy costs are rising. You might have noticed that on your own bills, but the broader trend was highlighted on June 15 when the Australian Energy Market Operator (AEMO) made an unprecedented decision to temporarily suspend operations. The organisation, which manages the nation’s electricity and gas market, declared that prices were so volatile that “it has become impossible to continue operating the spot market while ensuring a secure and reliable supply of electricity for consumers.”
The market was later reopened but the event made something clear: gas and electricity prices have exploded.
So what’s going on?
The reasons are complex, but at the core are two main issues: basic economics and climate.
The war in Ukraine has driven up the global price of liquefied natural gas (LNG) as sanctions have strangled Russia’s exports. Australia might be one of the world’s largest exporters of LNG, but we’re still affected by the global forces of supply and demand. As prices balloon internationally, we’ve ended up paying more locally just to get our share.
The effects are real. If you’re in Victoria, you’ll have seen the average overall wholesale price of gas increase by over 500% (no, that’s not a typo) from AU$4.65 to AU$28.83 per gigajoule between June 2020 and June 2022.
The nation’s electricity prices have soared for a totally different reason.
According to the Australian Financial Review around a quarter of Australia‘s coal fired plants out of action due to breakdown and maintenance. The country has also been through a wetter, cooler winter than normal, which has driven up demand, while cutting generation from solar installations.
So both supply and demand are causal factors in terms of the actual energy product, with added pressure from conflict, climate, labour and more.
Three ways to reduce energy costs in the short-term.
Check your contracts
The main thing you can do right now is educate yourself. By simply looking at your energy contract you’ll get a better grasp of what you’re paying and what you’re likely to pay next month. More importantly, you’ll understand your contract expiry dates and exit costs.
Many of our clients here at Wiley run large facilities that require a lot of power. Negotiations for big consumers are complex and time consuming. You don’t want to be negotiating a lower rate with only weeks left on the clock.
Look for cost savings
This is an area where we can help. We often find smart, innovative ways to reduce our clients’ power bills with simple upgrades and equipment modifications. You’d be surprised at how many times we’ve seen a new piece of equipment installed in the right place pay for itself in savings.
There are savings to be made simply by patching leaks. A small LNG leak can easily go unnoticed and can cost money as well as present a significant fire hazard. With a simple audit of your facilities, we can provide some very fast, simple ways you can reduce energy consumption.
Contact us for a chat about which solution is right for you.
Looking long-term? Here’s two options to reduce energy costs.
There’s no indication that energy costs will return to “normal” any time soon. In fact, with many East Coast gas reserves under long-term contracts with international customers, we can assume that the price of gas will continue to rise. There’s also another wet summer predicted. So, what can you do in the long term?
Many of our clients in the meat industry have installed biogas capture systems, which allow them to capture methane escaping from their wastewater ponds. As LNG is made up of 85 – 99% methane in liquid form, this technology provides companies with a clean and costless supply of gas. Most meat facilities, for example, use this gas to power their burners. This is an upgrade we’ve got significant experience in delivering, with a recent award-winning facility completed for Teys in Naracoorte.
This is the big one. Many of our clients have lots of roof space, which is a great place for a solar installation. We delivered one such project in late 2021, with 4,332 solar panels generating 1.95-megawatt of power installed on a new building for Melbourne Markets. Additionally, we installed new water tanks so the roof could capture 8,200,000 litres of rainwater each year.
There are hundreds of ways that businesses can reduce energy hikes and we’d be delighted to talk you through which options may suit your business. For an audit of your operations, call us today.