Monday 2 February 2015

Guest Blog: npower’s Wayne Mitchell on Energy Prices

Guest Blog: npower’s Wayne Mitchell on Energy Prices

Ten years of direct market access for major energy consumers

Today’s energy managers are just as likely to be scrutinising wholesale power prices as they are analysing energy efficiency and consumption figures. Yet a decade ago, only a very small handful of pioneering businesses wanted to buy their energy direct from the wholesale market.

To cater to their needs, we launched the npower Optimisation Desk – the first of its kind in the industry to provide unfiltered access to the energy markets.

The Optimisation Desk has recently celebrated its ten-year anniversary and today serves hundreds of business customers, typically spending between £1.8m and £120m on energy commodity costs per year.

These days, the need for methodological, disciplined risk management strategies that spread price risk over a longer horizon has never been greater.

A rollercoaster decade

Over the past decade, the energy market has become increasingly volatile. We’ve seen some major geopolitical events including two recessions, the Fukushima disaster, conflict in the Middle East and the Russia/Ukrainian gas conflict.

Unsurprisingly, prices have fluctuated enormously – from the lows of 2004 and 2007 where prices dipped below £20/MWh, to the highs of 2008 when peak power for month-ahead delivery soared to as high as £233/MWh.

Throughout, the Optimisation Desk has been there to help customers manage their exposure and control costs. Transparency is always a given, with the price visible in the wholesale market guaranteed and often bettered, thanks to the team’s expertise and range of trading options at their disposal.

Market intelligence on tap

Whether you are buying energy, or selling if you export power from on-site generation, a key requirement is access to accurate market intelligence. The Optimisation Desk offers twice-daily market reports as well as 24/7 access via our secure online portal Risk Navigator.

Energy Live News also streams our popular daily Market Update broadcasts, which have amassed more than 30,000 views since launching. In just two minutes, a member of the Optimisation Desk team outlines key market drivers and forecasts future trends. “Great videos” and “very informative” are among some recent viewer feedback. (You can view the latest Market Update here.)

Saving 10% with flexible purchasing

We ourselves at npower have saved more than 10% on like-for-like costs each year since moving from a fixed price to a flexible purchasing contract. And like many of our newer flexible purchasing converts, our own energy manager has been able to take advantage of a new generation of fully-supported energy buying products, where once a risk management strategy is agreed, the market is scrutinised and purchases made by experts on the Optimisation Desk.

That level of service was unheard of ten years ago. But it’s products such as Direct Budget Management that have helped the Optimisation Desk to become a two-time winner of Best Risk Management Product and Service of the Year category at the Energy Awards.

The wholesale energy market is now open to everyone – seasoned professionals as well as time-poor or inexperienced newcomers. So it is with interest that I look forward to seeing what new developments the next decade brings.

This is a sponsored article.

Written by

Bruna Pinhoni

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