Australia’s energy crisis: What you need to know and steps businesses can take to adjust to the new norm

by Vivid User | Mar 27, 2017
Australian businesses are now in the grip of an East Coast energy crisis. Energy Action's COO and CFO Michael Fahey discusses everything you need to know to ensure you are managing the risks.

Across the East Coast of Australia, business owners are facing significant cost imposts with surging gas and electricity bills as a major energy crisis grips the energy market. We have recently seen some businesses foreshadowing the impact of the rising forward prices for electricity by changing their outlook on investment and staffing levels.

Market participants generally agree that higher energy prices are here to stay, at least in the short term, but there are steps that commercial users can take to assist in managing these risks and associated costs.

While the recently announced initiatives from the industry and both State and Commonwealth governments are welcomed, many of these projects have a lead time of some 3-5 years. If your contract is expiring in the next 6-12 months, you have a “real-time” problem that needs a “real-time response”.

Here’s everything you need to know about recent developments in the electricity and gas markets, and how you can address the impacts within your business.

What’s causing the energy crisis?

The structural causes of the Australian energy crisis mean that higher gas and electricity prices – along with increased market volatility – are unlikely to abate in the short term:

  • South Australia has already been subject to a high-profile string of costly blackouts.
  • The impending closure of Victoria’s 1,600 megawatt Hazelwood Power Station at the end of March will mean that base load electricity supplies across the East Coast will be significantly lower next summer than they were this year.
  • In addition, market analysis shows that gas power plants face fuel shortages as they struggle to cope with the additional demand.
  • A significant portion of East Coast gas reserves have been contracted by the LNG projects that have signed long term contracts with overseas customers, leaving very little additional supply that can be contracted out to the local market.

These factors have raised the very real prospect of a severe energy supply crunch, potentially including load shedding and severe blackouts across the eastern states next summer.

Impact of energy prices on business

Following the laws of supply and demand, these energy shortages are already causing power prices to increase dramatically, and the situation is likely to continue.

February was a particularly tumultuous month in both the spot and retail contract markets, with every state experiencing multiple very high-priced days as the mercury rose across the eastern and southern states:

  • In Queensland, the spot price averaged 24c/kWh for February.
  • It was slightly lower at about 18c/kWh for both South Australia and New South Wales, where excessively high demand led to load shedding during the second week of the month.

On the ground, many business owners and managers are already reporting that their energy contracts are now double or triple what they were just a few years ago.

Especially if you’re in an energy-intensive industry (such as manufacturing), these higher gas and energy prices can cause serious cash flow issues that can impact the sustainability of your business.

Managing usage and costs

Carefully time when you go to market on your next energy contract, choosing the right contract term, and taking steps to improve and manage onsite levels of energy efficiency can have a massive impact on your company’s energy costs.

Some of the key steps businesses should be considering include:

  • Be an “informed” buyer, and while paying for specialist advice may be a considered an unnecessary expense, what is the cost of an “uninformed” purchase?
  • Carefully review terms and conditions within current and new contracts.
  • Monitor your contract expiry dates: default rates accrued when you go past contract dates can be significantly higher.
  • Focus on load forecasting when negotiating new contracts – this can align contracts with actual predicted volumes and secure contract lengths that meet individual business needs.
  • Be aware that, given the new paradigm for energy prices and volatility, customers with 6 – 12 months left on their current energy contract should act now and not wait to renew a contract. Negotiating contracts with 2 months to expiry is not a recommended strategy in the current market.
  • Energy efficiency projects with an 18 – 36 month payback and with an implementation timeline of 3 – 9 months should be given a high priority as these will deliver “real-time” solutions by reducing the grid demand and insulate your business from the market volatility.
  • Increase the emphasis on identify and fixing energy “leakage”. Small leaks in the current market have substantial cost implications.
  • Look closely at fuel substitution and switching where possible.

If your business gets this right, it can provide cost advantage over other local competitors who don’t have an energy strategy, and who are subsequently left paying significantly more for their power bills.

However, the optimal procurement strategy and negotiating the right contract terms takes time to implement. Because of this and considering the importance of timing when it comes to approaching the current energy market, you will need to begin acting now to seize the opportunity.

Energy Action offers a range of tailored services that can help your business assess, improve and manage onsite levels of energy efficiency through the use of innovative energy efficiency and energy management initiatives.

With the right advice, your business can gain a competitive advantage by proactively adapting to the new realities of Australia’s energy market while your rivals continue suffering from bill shock.

49 comments

Leave a comment
  1. PETER | Sep 23, 2017
    Positive webpage, where did u think of the data on this posting?I have perused a couple of the articles on your site now, and I truly like your style. You rock and please keep up the successful work.  information escrow
  2. PETER | Sep 19, 2017
    I gotta most loved this site it appears to be exceptionally useful .  Buy NBA 2K18 MT Online
  3. jackman30 | Sep 15, 2017
    the helpful data to us continue the good work. I definitely enjoying every little bit of it. It is a great website and nice share. ukrainian bride
  4. PETER | Sep 11, 2017
    A debt of gratitude is in order for your data, it was truly extremely helpfull..  escort in amsterdam
  5. Robinjack | Aug 27, 2017
    This is extremely instructive substance and composed well for a change. It's pleasant to see that a few individuals still see how to compose a quality post!  buy a star
  6. SEO | Aug 25, 2017
    Much obliged for setting aside an ideal opportunity to examine this, I feel firmly about it and affection adapting more on this subject.  Rivercove Residences Sengkang Sports and Recreation Centre
  7. Michael Doherty | Aug 24, 2017

    Many thanks for sharing this very diverse opinion post where each expert has no doubt shared his best knowledge on the topic. Have more success in your journey. 
    Economics Assignment Help is Available 24*7

  8. Michael Doherty | Aug 24, 2017

    Thanks a lot for sharing it, that’s truly has added a lot to our knowledge about this topic. Have a more successful day. 

    <a href="https://www.goassignmenthelp.com.au/economics-assignment-help/">Economics Assignment Help Online</a>

  9. SEO | Aug 20, 2017
    I just couldn't leave your site before letting you know that I genuinely delighted in the top quality data you present to your guests? Will be back again often to determine the status of new posts.  Robert
  10. Robinjack | Aug 20, 2017
    I have read your article, it is very informative and helpful for me.I admire the valuable information you offer in your articles. Thanks for posting it.. Tom
  11. SEO | Aug 18, 2017
    Much thanks to you for peopling get the data they require. Extraordinary stuff not surprisingly. Keep up the colossal work! Tessensohn Residence Low Keng Huat
  12. Robinjack | Aug 17, 2017
    i was simply perusing along and happened upon your web journal. simply needed to say great online journal and this article truly helped me.  Rezi 35 Development 35
  13. peter | Aug 13, 2017
    I truly cherished perusing your online journal. It was extremely very much composed and straightforward. Not at all like different online journals I have perused which are truly not that good.Thanks alot!  tours estocolmo en español
  14. azseo | Aug 10, 2017
    We Build High Quality Backlinks Through Blog Commenting For Helping to Improve Domain Authority , Page Authority and Trust Flow of your website/Blogs. High DA PA Backlinks | trust flow blog comments
  15. SEO | Aug 04, 2017
    Much obliged, that was a truly cool read!  ukrainian brides dating
  16. SEO | Aug 01, 2017
    I am trusting the same best exertion from you later on too. Truth be told your experimental writing abilities has roused me.  casino-kartenspiele.co
  17. Robinjack | Jul 30, 2017
    I truly cherished perusing your online journal. It was extremely very much composed and straightforward. Not at all like different online journals I have perused which are truly not that good.Thanks alot!  15 Minute Manifestation
  18. SEO | Jul 25, 2017
    I am unquestionably making the most of your site. You unquestionably have some extraordinary knowledge and incredible stories.  Cinemax live stream
  19. seo | Jul 24, 2017
    I am all that much satisfied with the substance you have specified. I needed to thank you for this extraordinary article.  http://bestmalesex.weebly.com/
  20. SEO | Jul 13, 2017
    I was surfing net and luckily ran over this site and discovered exceptionally intriguing stuff here. Its truly enjoyable to peruse. I delighted in a considerable measure. A debt of gratitude is in order for sharing this superb data.  ukranian date
  21. Accounting Assignment Writing Service | Jul 10, 2017
    Accounting Assignment Writing Service  We also share some information about our business.
  22. Python Programming Homework Help | Jul 10, 2017
    Python Programming Homework Help  I genuinely appreciated understanding it. Sitting tight for some more incredible articles like this from you in the nearing days.
  23. Jhon | Jul 04, 2017
    I am cheerful to locate your recognized method for composing the post. Presently you make it simple for me to comprehend and actualize the idea. Much obliged to you for the post.  Trust Lawyer Mount Clemens MI
  24. Robinhack | Jul 04, 2017
    Solutions Middle East, works to Envision, Execute and Empower our clients by offerings design, implementation and on-going support services.
  25. SEO | Jun 30, 2017
    Much obliged to you for setting aside an ideal opportunity to distribute this data extremely valuable!  Upcoming Mazda
  26. Robinjack | Jun 20, 2017
    I am cheerful to locate your recognized method for composing the post. Presently you make it simple for me to comprehend and actualize the idea. Much obliged to you for the post.  Trust Lawyer Mount Clemens MI
  27. Robinjack | Jun 20, 2017
    Awesome review, I am a major adherent to remarking on web journals to illuminate the online journal scholars realize that they"ve added something beneficial to the internet!..  www.flowerssameday.org.uk
  28. Robinjack | Jun 17, 2017
    Its an incredible joy perusing your post.Its loaded with data I am searching for and I want to post a remark that "The substance of your post is magnificent" Great work.  voyance en ligne
  29. Robinjack | Jun 17, 2017
    Decent to peruse your article! I am anticipating sharing your undertakings and encounters.  Business Insurance San Marcos TX
  30. Robinjack | Jun 15, 2017
    I was surfing net and luckily ran over this site and discovered exceptionally intriguing stuff here. Its truly enjoyable to peruse. I delighted in a considerable measure. A debt of gratitude is in order for sharing this magnificent data.  Shoes For Crews Men
  31. SEO | Jun 14, 2017
    I am upbeat to discover this post exceptionally helpful for me, as it contains part of data. I generally want to peruse the quality substance and this thing I found in you post. A debt of gratitude is in order for sharing.  http://www.bigdeal.sg/martin-modern-condo-city-centre-guocoland/
  32. Alex | Jun 13, 2017
    I truly awed after read this in view of some quality work and instructive considerations . I just wanna express profound gratitude for the essayist and want you to enjoy all that life has to offer for coming!.  Elder Abuse Lawyer Chico CA
  33. SEO | Jun 11, 2017
    What is certain is that its large fan base is on pins and needles waiting for the sequel of Log Horizon to come out. We have come across numerous comments online stating how much they want to watch the third season and inquiring about when it will be released. Log Horizon 3
  34. Robinjack | Jun 11, 2017
    A debt of gratitude is in order for setting aside an ideal opportunity to talk about this, I feel firmly about it and adoration adapting more on this point. In the event that conceivable, as you pick up mastery, would you brain overhauling your website with more data? It is to a great degree supportive for me.  internet TV
  35. Alex | Jun 10, 2017
    A debt of gratitude is in order for sharing this data. I truly like your blog entry all that much. You have truly shared a useful and intriguing blog entry with individuals..  Simple Probates Lawyer Arlington TX
  36. Alex | Jun 10, 2017
    A debt of gratitude is in order for posting this data. I simply need to tell you that I simply look at your site and I discover it exceptionally fascinating and enlightening. I can hardly wait to peruse loads of your posts.  Custody Attorney Anchorage AK
  37. Alex | Jun 10, 2017
    A debt of gratitude is in order for your data, it was truly exceptionally helpfull..  Estate Planning Law Firm Saratoga CA
  38. Alex | Jun 10, 2017
    I discovered your this post while scanning for some related data on online journal search...Its a decent post..keep posting and upgrade the data.  best solar christmas lights
  39. Alex | Jun 10, 2017
    Much thanks to you such a great amount for sharing this awesome blog.Very moving and accommodating too.Hope you keep on sharing a greater amount of your ideas.I will love to peruse.  flowers by post tesco
  40. Alex | Jun 10, 2017
    I take in some new stuff from it as well, a debt of gratitude is in order for sharing your data.  http://allonlineflowers.com/
  41. Robinjack | Jun 10, 2017
    Exceptionally valuable information. Want to see more posts soon!.  visit betcrazy.co.uk
  42. SEO | Jun 09, 2017
    Much obliged for setting aside an ideal opportunity to examine this, I feel firmly about it and affection adapting more on this subject.  Opptrends
  43. Alex | Jun 07, 2017
    A debt of gratitude is in order for sharing this helpful information..  DWI/DUI Law Office Greensboro NC
  44. peter | Jun 06, 2017
    Boredom is a killer—which is why a cure for boredom can be a lifesaver. The truth is, portable Bluetooth speakers have been the handheld solution to elevate the moment, whether at the beach, the middle of a party, or a lazy afternoon at home for years now—and your brand can get in on that excitement. Right now—with C2BPromo.com, you can put you logo on a wide array of Promotional Bluetooth Speakers, in all different shapes and sizes, from waterproof to resilient wood—with models coming in at 6-7 dollars all the way up to high-end luxury designs. Multiple surfaces on almost every customized Bluetooth speaker can showcase your logo—so no matter which way it’s turned, your name is always center staged. Promotional Speaker
  45. peter | Jun 06, 2017
    Boredom is a killer—which is why a cure for boredom can be a lifesaver. The truth is, portable Bluetooth speakers have been the handheld solution to elevate the moment, whether at the beach, the middle of a party, or a lazy afternoon at home for years now—and your brand can get in on that excitement. Right now—with C2BPromo.com, you can put you logo on a wide array of Promotional Bluetooth Speakers, in all different shapes and sizes, from waterproof to resilient wood—with models coming in at 6-7 dollars all the way up to high-end luxury designs. Multiple surfaces on almost every customized Bluetooth speaker can showcase your logo—so no matter which way it’s turned, your name is always center staged. Promotional Speaker
  46. peter | Jun 03, 2017
    A debt of gratitude is in order for sharing this data. I truly like your blog entry all that much. You have truly shared a useful and intriguing blog entry with individuals..  online clothing
  47. PETER | May 13, 2017
    I truly adored perusing your web journal. It was extremely all around composed and straightforward. Not at all like different online journals I have perused which are truly not that good.Thanks alot!  livecasinoonline
  48. peter | May 10, 2017
    Wow i can say this is another extraordinary article of course of this blog.Bookmarked this website..  live streaming TV channels
  49. nazlin | Apr 16, 2017

    Leave a comment