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Exactly what affects the cost of energy unit prices?

Energy unit prices go up and down so much and it’s hard to know which offer and supplier to choose. Then when you go for one, suddenly newer, better offers come up.

So what exactly makes energy unit prices rise and fall? If you knew, it could help to understand which rate to go with.

As the gas rates are the cheapest they have been for years Fixed-rate energy unit prices are the way to go, especially if you can fix these rates for the next three or four years you give your business certainty.  Concise Energy is able to offer your business some fantastic rates currently, don’t miss out contact them now at moreinfo@concise-energy.co.uk

Here are some factors that affect the unit rate of your gas and electricity. Knowing these can help you understand what’s happening in the world and to help you be savvier when it comes to spotting decent deals long-term.

Decrease in demand

With the lockdown in place, business demand for gas and electricity has gone down. This is because hospitality businesses, venues, non-residential goods factories, and construction companies have not been operating on-site.

Of course, a crisis such as an epidemic can’t always be predicted, but when it does, it’s a good time to look out for deals if your considering switching.

Cost of Resources

When essentials like oil go up or down in price, it, of course, logically has a knock-on effect on gas.

Oil is a limited resource and essential to the manufacturing of gas.  The recent drop in demand for gas due to lockdown is a prime example of this, leading to a drop in demand for oil. This has brought prices down with certain suppliers, however,  not all have. So, go with the ones that are.

Keeping an eye on prices can help you be aware of what’s happening and how this could affect energy prices in the future. A specialist energy consultant like Concise Energy can help give an insight into trends and the lowdown on energy supplier costs. The cost of suppliers’ expenses could impact your business energy bills.

Business expansions

With many energy suppliers under pressure to develop services, such as wind turbines for renewable energy, it involves more investment. While many new offers and incentives can be offered to businesses that opt for more sustainable energy sources, until then, suppliers may raise rates to cover the costs of the initial investment. Unfortunately, but so and will only mean a short-term price rise and hopefully, an improved service.

Weather Forecasts

Of course, warmer weather lowers your gas bill and in the winter, this puts up your energy prices. But there’s more to it than that. A forecast of stormy weather or a long, snowy winter could spark some one-off deals or a change in pricing.

What’s more, with energy increasingly being created from renewable energy, such as wind and solar power, these are reliant on the type of weather. So, depending on how much power can be created, will affect energy prices, too.

Introduction of New Regulations

 When the government introduces restrictions or changes to energy supply or regulations, such as a price freeze, it plays a big part in energy costs. One example is the price cap on energy, introduced this year, which helped lower bills and provide reasonable tariffs, was a real plus for struggling customers. To help businesses feeling the financial loss of Covid-19, there is help to spread out their costs or be given grace to make payments.

Change to Wholesale Cost

When the charge of the wholesale price goes down, like gas, this can cause prices to drop. Particularly when combined with another factor like product demand. So, the seller needs to offload as much as possible. This is particularly when suppliers buy wholesale energy in advance, rather than according to demand.

Considering Switching? Need to Save Money?

With all of the new energy suppliers popping up, it can be overwhelming knowing which one to go for. For a free consultation, call on 0800 195 7831 or fill out a quick form for us to call you.

 

 

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