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How Business Energy Prices are Affected by Cold Weather

Cold weather can have a direct impact on businesses. Gas and electricity prices often increase due to the increase in overall usage. With an unusually cold winter, there will be a much higher demand. Increasing supply is hard and therefore wholesale prices will also rise. However, there are ways to combat this by keeping an eye on the weather forecast. There are also small changes you can make in your business to reduce the amount of energy you use.

In this
guide:

How does weather affect business energy prices?

It may seem odd to consider weather as a reason for fluctuation in your energy prices, however it does have an important impact.

The biggest weather-induced fluctuations in wholesale energy prices are experienced during winter - especially when temperatures get extremely low. This makes sense, as everyone will undoubtedly turn their heating up and thus consume more gas overall.

The rest of the country will also be doing the same, meaning demand increases rapidly with little being done about supply. This then affects wholesale prices, making your energy bill much more expensive.

Cold weather can also affect your electricity bill. This is because during the winter renewable energy generation becomes more sporadic. Solar energy pretty much vanishes, and wind power becomes much less reliable. This means that more gas is used at natural gas-fired power plants which can result in higher prices.

How can you prepare for the fluctuating prices and prepare for the future?

Being aware of the impact that cold weather can have on the wholesale cost of energy gives you an advantage when it comes to saving money on your energy bills.

If your business is particularly dependent on gas or electricity for its operations, keeping an eye on the forecast will make you more prepared for any potential change in energy prices, and help you avoid any tricky financial situations that may arise.

By looking at the temperatures experienced in the UK during previous winters, and cross-referencing this with the wholesale cost of energy, you can start to pick up patterns in how the next winter might affect your business energy bill and cash flow.

How can you reduce energy costs during the winter?

  • You can use a price comparison site such as ours to compare business energy deals. This is the most effective way of getting the best quotes quickly and easily from the widest range of suppliers.
  • Make an energy audit. You won’t be able to make meaningful changes if you don’t know exactly where you are losing money. An energy audit involves looking at the whole business and analysing where changes could be made.
  • Turn off the lights. This may seem like an obvious point to make, but a lot of money can be saved if you turn off lights when they are not needed. Make sure you have someone go around at the end of the day turning off equipment and lights so that you are not wasting money paying for electricity you’re not even using.
  • Another way to save energy is to install programmable thermostats. This gives you the power to automatically adjust the temperature of the workplace when there is no one there. By reducing the AC in summer and the heating in winter by just one degree, you can reduce the power you use by up to 10%.
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