19 May Will my Business benefit from the wholesale market and how does it work?
- Wholesale electricity prices are rising to around $0.06-0.07 per kilowatt hour in eastern Australia and $0.10 per kWh in South Australia, compare this to the retail price on average in 2017 of $0.20 c kWh.
- Gas prices are also rising rapidly which in turn drives up power prices.
- These increases will impacts your power bills.
Wholesale electricity is sold by generators to retailers in a spot market where prices shift every 30 minutes. Retailers then add their margin taking into account volatility in the market price so that they hedge their profits. The difference between the Wholesale and Retail price to the customer can be as much as 25%
To control their risks in the spot market, retailers also buy and trade futures contracts for electricity.
The chart above from the Australian Energy Regulator site shows historical wholesale electricity prices as collated by the Australian Electricity Regulator, and adds on current wholesale futures prices as reported by the ASX.
If you believe the wholesale market may benefit your business be sure to research as much as possible and talk with companies such as Class A Energy Solutions who can assist and advise on the pros and cons of this confusing market.
Energy is a major issue currently and getting it right only needs to be done once.
Businesses that manage their energy through measures such as solar power, variable speed drives, power factor correction , lighting and staff training can significantly reduce their energy costs over the year.
Large market customers over 160 MWH can also heavily reduce their demand charges giving even more savings to the bottom line.