Ameresco shares an insider’s view of what’s been happening in the last year around energy prices and practical advice on how to look at your energy costs going forward.
Organisations and individuals are slowly becoming aware of the staggering rise in energy prices and the impact on their cost base and the wider economy. It’s no secret that prices have been going up, but few people are aware of just by how much and why, and they’re even more unsure about what’s going to happen next. Here’s an insider’s view of what’s been happening in the last year and practical advice on how to look at your energy prices going forward.
Energy prices crashed after COVID-10
The COVID-19 pandemic in 2020 sent energy prices crashing, with demand drying up worldwide as companies were forced to close operations and send staff home. Prices dropped to multi-year lows in the summer of 2020 and stayed low for the rest of the year and the first half of 2021.
Prices started to creep up in the second half of 2021
In July-August 2021 prices started to head higher, kicking off alarms for organisations like Ameresco that monitor prices daily. Fears over storage levels in the run up to the winter pushed prices for natural gas above 200 pence per therm, an increase of over 400% on the previous year.
And then Russia invaded Ukraine
In the first few months of 2022, it looked like prices could start to fall back, and then Russia invaded Ukraine and the resulting geopolitical uncertainty, imposition of sanctions on the Russian regime and ongoing war spiked prices higher. 200 pence a therm for gas now looks like a “normal” trading range. But is this going to continue for a short or long period?
Prices could stay high for the next three to five years
Let’s look at the fundamentals. Global gas demand is up – we know this was happening even before the Russian invasion. The risk is that global supply reduces as pressure increases on consuming natio
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